Comment on Multi-distribution i.e. increasing penetration through new modes of distribution such as the internet, direct and telemarketing and NGOs

Introduction:

Until recently the most consistent model for distribution of life insurance products across the world focused on door-to-door selling by insurance agents or financial advisers and selling to individuals through local bank branches. In both methods, the service proposition for the customer centered on face-to-face interaction; the provision of advice and trust in the individual providing this advice.

Today, however, the flow of financial services from provider to customer presents a more disparate pattern. The distribution revolution has created a new matrix of opportunities for traditional providers - both new modes of distribution and new partner organisations to distribute products.

 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. David, Partner, Financial Services, Consulting France 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.”