Page 260 - Performance Leadership

Chapter 13 The Insurance Performance Network • 249

Selling insurance, until recently, was a relatively straightforward
process. Based on actuarial calculations, insurance companies designed
a few products per insurance category and either sold those products
to consumers via intermediaries or through a direct channel (direct
writing). Most of the relationships were very transactional, as many
intermediaries are independent and work with multiple insurance com-
panies. The trust levels within the performance network were usually
based on contractual trust: the conviction that both parties would
deliver what was promised, based on a minimal exchange of informa-
tion. Communication would be about product information, transac-
tion status, and commission. In many cases, to protect their domain,
the intermediaries did not even share all customer data. Today this
process looks very different.

Intermediaries
Insurance companies have invested heavily in building tighter rela-
tionships with intermediaries, particularly by sharing information. Inter-
mediaries can make use of information systems developed by insurance
companies to guide customers through more complex products. Insur-
ance companies allow intermediaries to do professional direct market-
ing under the intermediaries’ label, using the “marketing machine” of
the insurance company. Also, insurance companies allow intermedi-
aries to access administrative systems directly, eliminating paper-based
processes and speeding up the underwriting, claim, and renewal
processes. These are all examples of how insurance companies have
moved away from transactional relationships and toward added-value
relationships. This also requires a different kind of trust: competence
trust, where the intermediary should have faith in the insurance com-
pany’s ability to run a professional direct-marketing campaign or allow
the insurance company in any other way within its business processes.

Brokers
New channels and different value propositions have emerged. For
instance, usually through brokers, insurances are sold to human
resource departments as part of the employer’s compensation packages
offered to employees. The HR department outsources the insurance