Page 262 - Performance Leadership

Chapter 13 The Insurance Performance Network • 251

and average-in-class of all contributing insurance companies. The trusted
third party represents the joint-value relationship between the insurance
companies based on goodwill trust. In order to enable that, the board,
consisting of managers of each participating insurance company, is an
important governance structure. Collaboration, even with competitors,
is an important means of innovation in the insurance market.

Consumers
Some insurance companies allow their customers to build their own
specific coverage, based on various product components, into a single
unique policy with a single unique price, much like a “mass cus-
tomization” process that can be found in the automotive industry. Direct
writing, a process that has existed for many years, where customers deal
with the insurance company directly without going through an inter-
mediary, is now an entirely different process. The insurer needs to move
from product sales to a framework in which various product compo-
nents can be combined, overseeing risk factors and legal issues. You
could even think of virtual insurance companies, combining product
components from multiple insurers, creating unique packages.

Building the Performance Network
Insurance performance management and its networked business model
should be better aligned. The current misalignment between per-
formance management and the business model leads to suboptimiza-
tion, which is particularly impactful in a low-margin business such as
general insurance. Therefore, actively seeking opportunities to evalu-
ate how an insurance company’s stakeholders could contribute more
to the performance has much greater leverage than focusing on the
insurer’s performance optimization. Also, the performance network sup-
ports the business model. Implementing the performance network will
drive the insurer’s management toward a more outward-looking and
collaborative mindset, leading to more innovation and a competitive
advantage. In this case, the performance network drives the further
development of the business model.
Table 13.1 shows an overview of reciprocal performance indicators
between an insurance company and its intermediaries, brokers, and