Monday, February 9, 2009

Capgemini & EFMA World Insurance Report 2009 Reveals Vital Multi-Distribution Channels for Capturing Growth in a Challenging Market

Many of the world’s insurance companies are moving toward multi-distribution models, recognizing that the sale of insurance through multiple distribution networks1 is a powerful lever for growth, especially in mature markets, according to the World Insurance Report 2009 from Capgemini and the European Financial Management and Marketing Association (EFMA).

The report’s findings draw on a survey of 2,250 distributors and in-depth interviews with 59 senior executives from leading global insurers. The report covers the retail insurance market, including both non-life (including health) and life segments. The World Insurance Report 2009 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 progress insurers are making in building and leveraging multi-distribution capabilities.

Multi-distribution has high potential as a growth lever

Multi-distribution is the most effective way for insurers to attract new customers and increase the wallet share from existing customers. The average mature-market insurance customer holds 5.2 policies, but the average share of wallet for a single insurer is only 1.1 to 1.5 policies.

According to Bertrand Lavayssière, Managing Director, Global Financial Services, Capgemini; “Insurers face heightened competition from the increasingly complex web of intermediaries (networks) and access points (channels) in retail markets. Given current market conditions, multi-distribution offers insurers a way to retain and increase share-of-wallet more effectively and face a highly competitive environment by managing networks and channels more efficiently.”

Multi-distribution can help insurers to generate additional revenues and improve network sales productivity, since lead generation and management are more tailored to ‘value-creating’ relationships. As a result, cross-network cooperation can increase the sales conversion rate, and therefore improve the sales productivity of networks – which consequently boosts revenues.

Even a few actions can quickly reduce resistance to multi-distribution and increase enthusiasm

For distributors multi-distribution can mean fiercer competition, so not all are enthusiasts. Particularly in mature markets, traditional networks see new entrants and new distribution formats as a potential threat to their market share and positioning.

Significantly, though, the report finds there are conflicting views among distributors about the benefits of multi-distribution, and in particular network cooperation, even among those with the same business model. Based on views of multi-distribution, the report categorized four sub-segments of distributors: Very Enthusiastic (27 percent), Enthusiastic (29 percent), Resistant (31 percent) and Very Resistant (13 percent). Notably, there was a relatively even spread of network type in each group. The good news for insurers is that data show distributors are not inherently pre-disposed by their business model to be pro or anti multi-distribution and their attitudes can be influenced to reduce resistance and create real enthusiasm for multi-distribution.

In fact, the 2009 report shows various levers can quickly improve distributor attitudes to multi-distribution. Insurers can exert the most influence by dealing first with financial incentives, but there is also significant benefit to dealing with certain issues related to the Internet, such as convincing distributors the Internet will help them sell additional products to their customers. That lever, when pulled in the correct sequence with others, would have increased the size of the Very Enthusiastic segment by about 150 percent and decrease the Very Resistant segment by 50 percent.

Proprietary Multi-Distribution Maturity Assessment Model scores industry progress

The 2009 report reveals that a mature multi-distribution model develops through five distinct stages. Using a proprietary Multi-Distribution Maturity Assessment Model, the report calculates an overall maturity score, and a score for each stage, for a significant industry sample.

It finds many insurers have already developed significant capabilities in the first three stages of multi-distribution: 1) developing multi-network, and 2) multiple-channel capabilities, and 3) mutualizing functions (i.e., centralizing and sharing distribution-related operational functions such as IT across networks).

Only a few insurers have advanced to the next stages of 4) centralizing intelligence, or 5) cross-network cooperation (i.e., attained a “mature” multi-distribution model). Notably, though, most mature multi-distributors overall have acquired a broad set of capabilities, suggesting insurers need at least a minimal level of maturity in all stages to excel. To conclude, although many insurers have developed significant capabilities in the initial states of multi-distribution, only a small number have developed more advanced models, leaving significant potential to capture further opportunities.

Moving to a multi-distribution model is a process of transformation for the insurer

The report identifies a series of immediate action steps that form the components of this transformation. Those steps require the insurer to 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.

Scott Mampre, Vice President Insurance, Capgemini’s Financial Services Global Business Unit (GBU) says: “Admittedly, an effective multi-distribution model is challenging to implement, especially because its various facets, like cross-network cooperation, can be tough to initiate. But once the operating principles of multi-distribution are established and functioning, a virtuous circle is likely to ensue. This kind of growth opportunity is especially urgent in today’s tough operating environment, when insurers need to focus more and more on generating revenue and growth from the core business of product development, underwriting and distribution.”

About the World Insurance Report, 2009

Now in its third year, the World Insurance Report 2009 from Capgemini and Efma focuses on the theme of multi-distribution. Building on the findings from the 2008 report that insurers can increase market access and share of wallet through multi-distribution, this year’s report will investigate the capabilities being developed and strategies that leading insurers are adopting to achieve success in multi-distribution. Based on research covering 59 interviews with senior executives from leading global insures and over 2,250 distributors surveys, the World Insurance Report 2009 draws data covering 17 countries: Austria, Australia, Belgium, Denmark, France, Germany, India, Italy, Japan, the Netherlands, Norway, Poland, Portugal, Spain, Switzerland, the United Kingdom, and the United States. The report assesses insurance companies’ multi-distribution maturity, investigates key multi-distribution challenges, highlights leading practice, and proposes approaches to overcome these challenges. The World Insurance Report 2009 will bring further insight and thought leadership to one of the most important strategic issues facing insurance sector today.

For more information or to download a copy of the World Insurance Report 2009, visit

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working - the Collaborative Business Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in 36 countries, Capgemini reported 2007 global revenues of EUR 8.7 billion and employs over 88,000 people worldwide.

More information is available at

Capgemini’s Financial Services Global Business Unit (FS GBU) brings deep industry experience, enhanced service offerings and next generation global delivery to serve the financial services industry. With a network of 10,000 professionals serving over 900 clients worldwide, the FS GBU collaborates with leading companies in banking, insurance, and capital markets to create tangible value.

For more information please visit

About Efma

Efma promotes innovation in retail finance in Europe by fostering debate and discussion among the main players involved in change. Formed in 1971, Efma comprises 2,450 different brands in financial services worldwide today, including 80% of the largest European banking groups. Through regular events, publications, and its comprehensive website, the association provides retail financial service professionals with answers to their questions about the main issues at stake in their business: multiple distribution strategies, customer approach, CRM, product and service marketing and improving profitability. Efma is above all a dynamic association, providing a great opportunity for discussion and exchanges without any commercial constraints. It provides its members with a wide range of exclusive services as well as discount rates on non-gratuitous activities. The loyalty of its members as well as their permanent financial support are the best proof of its efficiency.

For more information, visit

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