Thursday, April 12, 2012

Insurers: Find a model of partnership with the profession of agent to better meet the challenges of tomorrow


For many companies, the network of general agents is the main vector distribution. Historically, the General Agent was virtually the only point of contact with customers, prospecting the claims.

The General Agents - unlike employees of the company - are entrepreneurs, who hold a portfolio of contracts and therefore a customer. For twenty years, a number of fundamental context of the distribution of insurance have changed: the appearance and growth of the use of "new" channels (internet, mobile ...), changes in market share (MSI , banks ...), coming into play of new distributors (supermarkets, banks ...).


Insurance companies have therefore shifted their distribution strategies accordingly. To remain efficient and meet their new targets, they must accompany the agents and promote their development.

Economically sustain the network of general agents

The agent is faced with all the economic constraints of a contractor. Having invested in a portfolio of clients and having to face multiple charges (personal, local, fees owed to the company ...), he must return on this portfolio by developing it. He also competes in the first line. This has greatly increased especially on the side of banks in recent years. A minimum size and a real potential for development (perimeter sufficient to cover the territory, globally competitive products and / or products call ...) are needed for an Agent can draw from its business income and sustain satisfactory.

To ensure the economic sustainability, it is for companies to develop the geographical coverage and provide the tools to ensure an average agency commission sufficient. Aviva has such aims as part of his plan "Distribution 2015" to increase by about 35% commission through its agents.

To do this, several mechanisms are used by companies:
  •     Encourage consolidation of agencies, especially when their complementary expertise,
  •     Enjoy redemptions of portfolio-related retirements and review the territorial network to reach critical mass to neighboring portfolios,
  •     Provide opportunities for portfolio acquisitions from other networks (Aviva recently proposed its agents opportunities to repurchase portfolios with FAC Life Savings and Current)
    ...

For agents, this critical size is a prerequisite but is not sufficient. Requires that these conditions are sufficiently attractive acquisitions as they go through an additional investment. They must then necessarily have the means to develop effective business these extensions portfolio.

Develop agents with commercial efficiency of a global distribution system

Insurers seek to increase the efficiency of the commercial network of agents but also all their other networks (office employees, brokerage, mail order ...). For the insurer, business efficiency is a global issue interaction between several means of distribution.
So this is for them to find models "Multi-all 'performance. It is indeed past concerns in multi-channel multi-access (for existing customers). It will also find models to address effectively the multi-entry into relation, ie when several channels contribute to customer acquisition. In these models, the agent must be able to find its economic interest.

The solutions adopted by insurers to increase the synergies between their channels and distribution networks (Internet, agents, employees network ...) along with the performance of each of their networks are for example:

    the establishment of cross-functional services to all distribution channels - for the acquisition as the loyalty of customers (segmentation, direct marketing, winning over the internet ...)
    the organization of mobility of network resources to the agents employed in order to boost the level of sales agencies by integrating profiles purely commercial
    integration of existing networks in the internet strategy ...

Agents emit however some reservations about these proposals. They are particularly attentive to the company's Internet initiatives that could be a direct competition and fight against tariff too significant differences between what they can offer and what the company offers through other networks.

Certain criteria set by the companies for the appointment of new agents, or the placing of former commercial employees at the head of portfolios without having provided a full agency status (holding partial portfolio, different contracts ...) , are also seen as a control of the company to alter the DNA of the agent network. Indeed, companies may favor "typical profiles" of employees producing networks, which would take away the autonomy of the production, disaster management, and ultimately better control the agency.

Declining the strategy through the network of agents

Product Strategy

For years, insurers will primarily seek to:
  •     Cover new needs value-added (health, welfare, dependency, retirement) and giving hope of large volumes (due notably to the aging population)
  •     Continuing to build on the financial and banking services to lock the customer relationship (via lending products and visibility on flows) or go to the wealth management when the customer base permits,
  •     While the rest of the general insurance products (auto, HRM ...) to safeguard the profitability will be the only issue, leave to withdraw from the more difficult branches (where margins are limited).
 The reference range of traditional networks of insurance agent is just bad, it is essential for companies to move more and more to other products. However, agents have historically shown very limited interest for the distribution of financial products in which they found a small commission (excluding temporary trade incentives). Moreover, they do not always have the staff to play a bank branch, although the companies have provided training facilities to support this change and that the specialization of a bank employee on the part becomes more and more frequent.

It was found that MMA has abandoned last year's banking offer, closing all the accounts and books because they have acquired enough clients and the task is still heavy for these products to become a standard offering of all agents.

Customer Strategy

Among the key strategies of customer numbers of insurers, we note:
  •     The use of an increased segmentation of customers, impacting the structure of networks,
  •     The issue of loyalty as customers becomes increasingly volatile,
  •     The multi-equipment as a quality indicator of a major portfolio in the mass market.
 For example, Allianz whose strategy is strongly focused customer no longer wishes to segment the network depending on the product but according to customer needs, distinguishing: Enterprise, Heritage / TNS, Consumer. This is intended to foster customer intimacy.

Thus, the network of agents intended to remain but general profiles of agencies will be distinguished and differentiated sales events will be implemented based on these profiles.

A partnership model with the profession of agent to find

Faced with these challenges, so it is for insurers to sustain and modernize their networks of agents. On the one hand, sustain promoting the achievement of critical mass when it is not present and helping them to gradually diversify income sources related to product strategy. Second, upgrade the network by integrating it with other channels and allowing it to evolve to best meet customers' new expectations.

Agents generally share these issues but fear a restriction of their autonomy and their capacity for entrepreneurship that is the nature or the purpose of this profession. Some solutions currently offered by companies are not satisfactory for them.

This requires companies to find a model of partnership with the profession of agent. This requires above all the dialogue between companies and the profession represented by employee unions.