It’s tempting to think that the economic downturn is like the weather: everybody’s talking about it, but nobody’s been able to change it.
I don’t agree. While I’ve never seen anything like this recession during my career, I believe we in the insurance industry have a unique opportunity during this economic crisis. It’s a good time to assess what’s working and to confirm the value that we as professionals (and our organizations) provide in the marketplace.
If we do, we’ll get better as an industry and as professionals, and our organizations also will improve. Our customers and the entire economy will be better off because of it.
Let me explain, and you’ll see how reassessing can generate greater opportunity.
First, a peek back at history. Up until the late 1980s, insurance carriers tried to be comprehensive providers of a wide range of products to a wide range of customers. It was common for carriers to have proprietary distribution systems that sold company-only products. Customers were serviced by an in-house team using home-grown administrative and technology systems.
But then (driven primarily by rating agencies), life/health insurance carriers were forced to reassess the “all things to all people” business model. The corporate soul searching began in earnest. Carriers began to specialize in product lines. Distribution channels sought independent and interdependent relationships with product providers. Service providers started to offer specialized capabilities in processing business.
Along with industry consolidation, this trend gave rise to specialists who “picked their genius.” That continues to be true today in product development, underwriting, distribution, and customer service.
Let’s look at what’s happening now. I predict that the pace of specialization will accelerate. The recessionary climate that began in December 2007 and the startling summer 2008 meltdowns in credit and consumer confidence will push our industry further along in this trend.