Development of a pan-European management model for insurers
The creation of pan-European central entities, specialized in the management and the distribution of insurance products across Europe, is becoming a widespread phenomenon.
The different management and distribution models for insurance companies
Today, three management and distribution models coexist in Europe.
The first model, the ‘traditional’ one, implies that an insurance company conceives, manages, sells and promotes insurance products in one single country. In this case, the European insurer has a production, management and distribution center in each country where he is active. The sold products are tailored to the local needs of each individual country.
The second model, or « cross borders » model, has been developed in some European countries among which Luxembourg. According to this model, an insurance company, located in a given country, conceives and manages insurance products in that particular country, but distributes them in the bordering countries. In this case, the insurer has one single production and management center in his country of origin, but several distribution centers in the bordering countries. The sold products are generally local insurance products that include the specific tax regulations of each bordering country.
The most recent model, called the pan-European model, implies that an insurance company conceives and manages its products in one single country (France, for instance) and distributes them across Europe. In this case, the insurer has one single production and management center in France, for instance, but several distribution centers across Europe and not only in the bordering countries. The second big difference with regard to the « cross borders » model consists in the fact that the sold products, although conceived in one single central entity, are insurance products that are tailored to the local needs of each country. In most of the cases, these central entities specialize in the conception and the management of one particular product, such as variable annuities or classic life insurances.
The advent of the pan-European model
The advent of the pan-European model is mainly due to the following factors:
· The evolution of the European regulations,
· The increasing complexity of the insurance products,
· Increased average knowledge of the clients.
In the traditional model, the insurance company has to implement the European regulations (Solvency II and others) in all its conception and management centers. In the pan-European model, the evolutions with regard to the European regulations must only be applied to some central units according to the product they are specialized in, which leads to cost reduction.
The increasing complexity of the insurance products pushes insurance companies to concentrate highly specialized human and technical skills around one product within a pan-European center rather than multiplying skills in different countries.
Moreover, clients are nowadays much better informed about insurance products, and this phenomenon is noticed across Europe. As a consequence of this increased knowledge, the average profile of the clients has become relatively similar in all the European countries, which doesn’t mean that all the European clients are identical. However, their needs with regard to insurance products show basic common features. Within this context, the implementation of a pan-European entity that creates a product having similar basic features for all the European countries and allowing the integration of local variants, becomes an interesting option.
The advent of the pan-European model will allow insurers to respect the legal constraints, manage cost control and meet the needs of their clients. The pan-European model is a reality in motion that insurers cannot disregard when defining their short- and medium-term strategies.
Tools tailored to the pan-European model
To become performing, a European conception and management center, must meet the following criteria :
· High level of reactivity to satisfy the requirements coming from the local intermediaries and clients,
· Optimized management of the variants between the different countries,
· Automation of the processes,
· Extensive cooperation between the pan-European center and the local distribution entities.
The selection of an IT management tool is essential for the smooth running of a pan-European center. Indeed, to have an optimized performance level, the selected tool must allow the simultaneous implementation of the four criteria mentioned above. With regard to an IT-tool, it means more specifically :
· Swift creation of new products,
· Efficient management of the variants of the new products,
· Fully automated product management,
· Product management within the frame of collaborative web model with the local entities.
BSB knows that the stakes are high and takes up the challenge with its insurance policy administration system Solife. Thanks to its advanced product workbench, Solife allows the swift and easy creation of products, including their variants, ensuring in this way an optimized « time to market ». The management of transactions through a « workflow business » permits the complete automation of the tasks and the optimization of both the individual and team work within Solife. The numerous web services of Solife and its Internet portal of the latest generation offer excellent web connectivity for an optimized cooperation between the pan-European center, the local distribution entities and even the final clients.
Conclusion
The advent of the pan-European model will enable insurers to respect the local and European regulatory constraints while achieving their objectives in terms of performances and client satisfaction. In order to do so, the division between the production and the selling of insurance products will be at the center of the new pan-European model.
The French insurers must integrate this new model into their strategies and select management tools that are able to support an easy conversion towards this pan-European model.
Didier Lambert – Consultant Insurance (actuary) BSB
Erika Bourguet – Marketing Manager BSB
