Page 261 - Performance Leadership

250 • Part IV Implementing the Performance Leadership Framework

part of the employee benefits program to the broker and insurance
company. “Employee benefits” programs are a completely new value
proposition for insurance companies, offered through a new channel.
Without brokers with professional account managers, many insurance
companies would have trouble building up such a sales process.
Together with the brokers, a joint-value relationship is built. There is
no such thing as a strict supplier/customer relationship; both parties go
to market together. This requires goodwill trust that is based on shared
values and go-to-market strategies.

Service Providers
Another type of joint-value relationship comes from working with “serv-
ice providers.” In many cases, claims are not paid out in cash. Instead
of cash payments, insurance companies have built networks of service
providers that “fix the problem.” Think of car repair shops or craftsmen
that can repair damage to the house. It is in the best interest of the serv-
ice providers to move away from a potential transactional relationship
and create an added-value relationship, where the switching costs for
the insurance company would be higher. In order to build up a
provider preference, service providers need to look for ways to adapt to
and integrate with the systems and processes of the insurance compa-
nies they work for, particularly something the larger chains are able to
achieve.
Some initiatives are bigger than one insurance company can
achieve. The major cost of general insurance is in claims. As it is a
price-sensitive business, the best bet on how to bring costs down is in
trying to decrease claim size. Whereas a single insurance company
would have trouble imposing a single process and systems standard, as
well as single pricing for car repair shops, for example, a group of insur-
ance companies with a collective dominant market share can. In one
case, the third party is financed partly by the contributing insurance
companies that also each appoint a member of the board. Car repair
shops, a total of 600, each pay a membership fee. They receive all the
business from the insurance companies, but need to adopt the stan-
dard processes, systems, and prices. Insurance companies can bench-
mark their average claim (per car brand, driver age class, geography,
cause of damage, and a variety of other angles) against the best-of-class