Strategic Alliances Create Another Path To Worksite Gold
Many industry insiders feel that successful worksite carriers come in two sizes: jumbo carriers that can provide all the products a producer might want, and small niche companies that specialize in just one worksite product.
Suppose you are a smaller company, and dont feel you have the expertise to develop and implement a broad worksite portfolio. At the same time, you may not consider yourself a niche player if your company has not established a reputation as a leader in any specific worksite product line. Does this keep you from competing in the worksite arena?
Absolutely not. There is another path into the worksite market: strategic alliances. Its a path that can lead youand your field–into the marketplace, bearing expertise and a broad array of products and opportunities.
What is a “strategic alliance”? Simply stated, it is a formal arrangement between companies to provide a product and marketing program to a specific market. An alliance might include consulting actuaries, reinsurers, marketing organizations, and administrators. Each partner brings its specific expertise to the venture.
Strategic alliances enable a life insurance company to get into popular worksite markets such as dental and disability. While producers and employers like to offer a broad product portfolio, many companies (especially smaller ones) lack the expertise or size to develop and implement such a portfolio on their own. This strategy helps them get there.
What does an insurer need to be successful in the strategic alliance arena? First of all, strong financials and stability are essential for every party to the venture. Any partnership is only as strong as its weakest link.
Success also depends on a companys corporate culture. To be a successful partner, a company needs to be creative, flexible, and quick to respond. Opportunities often arise because of a sudden change in the marketplace, and a marketing organization may find that it needs a program in as little as 60 days. A top-down decision-making process can slow your companys response.
Working through strategic alliances is not easy. For example, each party to a deal has its own agenda, so negotiations can be time consuming. Because the relationship is vulnerable if any of the partners changes course, contracts must address this possibility. You might, for instance, need to scramble on short notice to replace a partner that has decided to leave the program.