Insurance
Competition in the insurance industry has become increasingly fierce in recent years. Easier access to information on the Internet and redoubled efforts to protect consumers have made prices, costs and quality more transparent. As a result, customers have become more sensitive to price and cost issues, while at the same time demanding higher quality and better service. The insurance industry also faces exogenous challenges from legislative authorities and supervisory bodies, forcing them to adapt to a series of cross-border regulatory initiatives such as the EU's Insurance Mediation Directive and, in particular, Solvency II.
In brief
Roland Berger's Insurance Segment has extensive expertise in eight key areas, ranging from strategy definition to risk management, and covering the whole insurance and reinsurance value chain in all lines of business (life, indemnity/accident, health and reinsurance).
We support our clients – leading primary and reinsurance groups – in facing a wide range of challenges by leveraging our global network of functional experts.
Together with our clients, we identify strategic options, realign operating models, optimize distribution channels, reduce the complexity of organizational structures and IT landscapes and conduct comprehensive risk management programs.
Sample projects
The following projects illustrate our international experience in all lines of business of the insurance industry.
Developing an international expansion strategy for a leading global insurance group
Background
A leading global insurance group had various health-related business models (primary insurance, reinsurance, third-party administration) allotted to several lines of business all over the globe. The units cooperated only in a virtual structure and were not able to exploit the full potential of their health expertise.
Approach
We first defined the overall scope of the new organization and analyzed the tasks and interfaces of the different units. Next we designed a new organizational setup consolidating all international health-related business in one independent business segment and tailoring it to the requirements of the different markets. Five regional hubs on different continents provided a basis for extensive sharing of know-how and best practices, and a central office was able to effectively steer and monitor the business. The new organizational structure was detailed in a manual with role profiles and responsibilities, and existing tasks and FTEs were incorporated into the new organization.
Results
Bundling the group-wide health expertise in a new independent business unit enabled the client to offer comprehensive health solutions by providing integrated products and services along the health-risk value chain. Tailor-made solutions became possible thanks to new access to a multitude of business models (insurance, reinsurance, third-party administration). The group's focus on health and its global presence allowed it to realize international best practices and enabled the new business segment to make significant contributions to the group's growth.
Defining a strategic work plan for further penetration of the customer base of a leading German insurer
Background
The client – a leading European insurance group – was experiencing excellent growth in the life, P&C and health insurance segments, but its large increase in new customers was almost entirely offset by the erosion of its customer base. A number of actions were taken to counter this development and optimize the handling of the customer base.
Approach
We analyzed the customer data to identify and quantify the potential for increasing cross-selling and to add further detail to the existing customer segments. Interviews with sales representatives and extensive market research provided a clear understanding of the requirements of the sales organization. We then developed actions and tools for improved handling of the customer base and defined KPIs to support implementation and measure the impact of the actions taken.
Results
The client developed a better understanding of the makeup and dynamics of its customer base and was able to use specific tools and levers to exploit the existing potential. A set of clearly defined KPIs enabled the organization to effectively plan, manage and monitor its market initiatives.
Supporting the post-merger integration of one of Europe's leading insurance groups
Background
Two leading insurance companies based in Germany merged to form a group focusing on the life, property and casualty segments. The merged entity covered all customer segments, from DAX-30 companies to mass-market retail consumers. The goals of the project were to develop a concept, design the future organizational structure and implement the integration.
Approach
We developed a future organizational setup and integration strategy, as well as a master plan and detailed implementation plan for all work streams. We then defined the overall PMI synergies and KPIs, monitoring them throughout the implementation process. To prepare the organization for the transformation, the Integration Office and work stream leaders were advised on best practices and methodologies in PMI situations.
Results
The merger produced the third-largest insurance group in Germany, which started its new integrated operations on schedule with minimal operational risks and significantly reduced complexity in its organizational structures. Eliminating redundant structures and implementing specific efficiency actions (such as optimizing facility management and procurement processes) produced considerable synergies in terms of FTEs and a substantial reduction in non-personnel costs.
Developing a concept for the internal Solvency II model of a leading German insurance group
Background
A leading insurance company based in Germany had decided to opt for the Solvency II internal modeling approach. The company's portfolio consisted of life, health and P&C insurance, roughly equally weighted, its main customer focus being on retail insurance. The goal of the project was to design the future organizational structure for risk management, outline its interaction with the business lines and actuarial functions, and identify the resources required for the successful implementation of Solvency II.
Approach
We began by carrying out a thorough diagnostic analysis of the situation with regard to the organizational setup, processes and division of labor between departments. We then devised a number of prototype models for the organizational setup, ranging from total decentralization to a more centralized approach. This enabled us to understand the pros and cons of the various structural choices. We performed a detailed breakdown of all risk processes into 300 sub-processes to quantify the level of resources needed for each in the different models. Based on these analyses, we then made recommendations regarding the structure, size and reporting lines of future risk management functions.
Results
The client's management board approved the results of the project in full. Risk management was asked to prepare all the necessary implementation steps. Additional resources were hired to fill gaps, with a focus on implementing Solvency II. The group is currently updating its processes and model infrastructure. It plans to have the internal model approved by the regulator by 2012.
