What happens to insurance products once two companies combine via merger or acquisition?
More than a few insurance executives have bent my ear on this topic over the years. They have, as the saying goes, been there and done that.
Given that corporate combinations often blossom in the wake of recession and given that the U.S. economy slowly is entering a rebound, now seems a particularly good time to relay some of the points these execs have made.
(Note: This discussion uses the word “merger” to represent corporate combinations. But most of the points also apply to acquisitions.)
The following “what happens” list is a compilation of those points. They are not modeled on any one company but rather on comments I have heard most often. The list also includes some of my own observations, gleaned from watching products ebb and flow through many corporate combinations.
To simplify the conversation, let us use the term Company S for the stronger of the two companies, by financials and/or volume. Company W is the weaker of the two.
Here are some of the product-related events that occur after the deal is sealed:
Product care languishes for a while. This is especially true for Company Ws products. Typically, those policies now have only a stripped-down internal support system (often the result of pre-deal pruning). The W products may also suffer because their managers may have jumped ship upon hearing of the merger, and/or because the Company S staffers may not yet be up to speed on the W product line. Even “S” products suffer from neglect for a while, mostly because everyone is concentrating on business integration.
Product information sources shift into low gear. Marketing departments, public relations units, product literature experts, trainers and others start sifting through all the old materials, trying to salvage those that still apply. Often they must wait to learn of the companys new strategy for products before they can do more. No one is sure what to do about promoting the many products the company now has for sale.
Customers receive repeated notices regarding the change. These notices often tell about the new combined company. Some relate how the corporate transition is coming along. Few tell how the customers own product or service will be affected–until much later.