The World Insurance Report 2009 discusses the implementation, opportunities and challenges of selling insurance through multiple distribution networks. Multi-distribution has emerged as a key success factor for the world’s insurance companies, especially in mature markets.

The increasingly complex web of networks (intermediaries) and channels (access points) has made the distribution of insurance far more competitive, but multi-distribution offers insurers a way to transform the challenge of the competitive landscape into an opportunity.

Ultimately, multi-distribution offers insurers a way to reach customers that could not be reached before, and to extract more value from existing customers. However, multi-distribution—like any evolution—involves a process of transformation for the organization. This report focuses, in particular, on implementing that transformation.

The report’s findings draw on a survey of more than 2,250 distributors and in-depth interviews with 59 senior executives from leading global insurers3. Our research reveals new insights on the attitudes distributors have toward multi-distribution, the influence insurers have on those attitudes, the necessary steps to a multi-distribution model, and the real-life progress insurers are making in building and leveraging multidistribution capabilities.

What follows is a summary of our key findings:
1. Multi-distribution is a powerful growth model, especially in mature markets. It offers the most effective way to attract new customers and increase the wallet share from existing customers, and it can increase the rate at which customer contacts are converted into sales. As a result, even if the volume of sales leads (or customer contacts) is constant, multi-distribution can generate additional revenues. Moreover, the increased conversion rate accelerates revenue generation, and thus improves sales productivity.

2. Distributors are not inherently predisposed by their existing business model to favor or resist multi-distribution. There are conflicting views among distributors about the benefits of network cooperation, even among those with the same business model. This suggests it is not intrinsic characteristics like the type of network, incentive and commission structures or exposure to other networks that sway opinions about the value of multi-distribution. Distributor attitudes can therefore be changed.

3. 30 variables have some impact on the level of resistance toward multi-distribution. Of those, 14 have a very significant cumulative impact, led by financial incentives, the Internet and online portals. Above all, Very Resistant distributors doubt financial incentives can persuade networks to cooperate, but they are also skeptical the Internet will help them sell additional products to their customers, and are dubious about the value of insurers’ online portals and hosted Internet services.

4. Insurers can turn knowledge about drivers of resistance to positive effect to reduce resistance and create real enthusiasm for multi-distribution. All of the levers identified as drivers of resistance have the potential to be used to positive effect. Since each lever has a twofold effect, it is the additive impact of the levers—not their individual strength—that determines the optimal sequence in which levers should be pulled. Arguably, it is more effective to pull levers that tackle resistance first, before trying to increase enthusiasm.

5. A mature multi-distribution model develops through five distinct phases. We developed a Multi-Distribution Maturity Assessment Framework, with which we calculated an overall maturity score, and a score for each stage, for insurers in our sample.

6. Today’s multi-distributors use relatively simple approaches to positive effect to achieve network cooperation. Insurers have already adopted a range of approaches to exploit the natural synergies among networks, e.g., between physical and non-physical networks or product-specialist networks. It is those synergies that ultimately create value for all stakeholders—customers, distributors and insurers.

7. We believe that moving to a multi-distribution model is undeniably a process of transformation for an insurer’s entire organization. We believe seven critical enablers form the logical components of this transformation, in which insurers: start with the customer; follow with the network; rethink organizational design and leadership; embrace technology; test and learn with cooperation pilots; monitor the value of the overall business; and manage the power of information.

These findings should offer hope to insurers that fear the path to multi-distribution is too long and arduous to pursue—especially in the current economic downturn. In fact, it is true the path has its stumbling blocks, and requires an ongoing commitment to business transformation. However, multi-distribution is arguably even more important in this tough competitive and economic environment, when insurers will need to focus more and more on generating revenue and growth from the core business of product development, underwriting and distribution.

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PREFACE
Capgemini and the European Financial Management & Marketing Association (Efma) are proud to present the third edition of the World Insurance Report (WIR).

The World Insurance Report 2009 builds on the findings of its predecessor to explore the issue of multi-distribution—the sale of insurance through multiple distribution networks (e.g., tied agents, direct distributors, bank branches, brokers and multi-tied agents1). The report covers the retail insurance market, including both non-life (including health) and life segments.

In the WIR 2008, we identified the opportunity for multi-distribution to be a key success factor for the world’s insurance companies, especially those operating in mature markets, which are nearly saturated. In this report, we confirm multi-distribution is a way to reach customers that could not be reached before, to extract more value from existing customers, and to gain significant sales productivity.

This year, in response to overwhelming requests from the industry, we focus on issues of implementation.

Our research sought to answer a variety of questions, including:

• What conditions must exist for customers, distributors and insurers to reap value from multi-distribution? What are the benefits?
• What does multi-distribution offer vs. other approaches, including multi-channel models (i.e., providing multiple access points through which customers can inform their decisions, buy, and service their policies)?
• What makes distributors resistant to or enthusiastic about multi-distribution? Can insurers change the levels of distributor resistance and enthusiasm? And, if so, how?
• What capabilities does an insurer need to be an effective multi-distributor? Does the business need to evolve through specific stages? If so, is there some optimal sequence of evolution?
• What are some of the lessons learned from those insurers that are already operating as multi-distributors? Our analysis is driven by interviews with 59 senior executives from leading global insurers and data from 2,250 distributor surveys. The data is drawn from 17 countries: Austria, Australia, Belgium, Denmark, France, Germany, India, Italy, Japan, the Netherlands, Norway, Poland, Portugal, Spain, Switzerland, U.K., and the U.S.

Our findings confirm that multi-distribution is a powerful lever to increase market and customer access for insurers. This report offers a picture of multi-distribution maturity today, investigates key multi-distribution challenges, highlights leading practice, and proposes approaches to overcome these challenges.

We are pleased to present you with this year’s World Insurance Report, and hope you find real value in its insights.

Bertrand Lavayssière
Managing Director
Global Financial Services, Capgemini
Patrick Desmarès
Secretary General
European Financial Management & Marketing Association

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