If the last 10 years have been ones of change for the financial services industry, the next five years will offer even greater change, says Robert Devlin, chairman of American General Corp., Houston.
The industry used to be fragmented, but there will be greater integration during the coming years, Devlin predicts.
American General is in the midst of its own change, awaiting completion of an acquisition by American International Group Inc., New York, a company with more than $210 billion in market capitalization.
Devlin says the acquisition will make American General part of a ‘AAA’-rated company, strengthen American General’s balance sheet and put the Houston-based insurer in a more viable position.
“Scale matters today,” according to Rod Martin, senior vice chairman-financial services with American General. “Smaller companies, whether we like it or not, will be further marginalized.”
James Corcoran, executive vice president-government and industry relations with American General, says regulators are more concerned with suitability.
A small operation with only two to three products is in “a more difficult position to sell a suitable product,” Corcoran says.
The need for keeping abreast of technology will be easier for companies with the resources to afford such changes, Devlin adds.
Even though the financial services industry will remain “fairly fragmented” compared with industries such as the automobile and beverage industries, there will be 20 to 25 major players, Devlin says.
What will be important for insurers is to be part of a multidisciplinary approach that Devlin says a new Academy of Multidisciplinary Practice offers. American General is a brand sponsor for the new virtual academy, which seeks to offer broad-based continuing education that could be useful to a wide range of financial advisors, including attorneys, accountants and financial planners.
A team approach is needed because “no one individual really has all the answers,” he says. “We truly need to get the right discipline and the right approach.”
The Tax Relief Act of 2001 will accelerate the need for estate planning, not diminish it, Martin says.
When advisors go to the academy’s Web site and seek solutions, “American General” will be the name that theyll see, Devlin says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, July 13, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.