Development of retail distribution in insurance markets

The antecedents of many decades of market influence by brokers in the Nigerian insurance industry are well documented. Without doubt, it has left in the minds of serious underwriters the need to move to multiple source of premium revenue generation. This has twin advantages for the industry:

Firstly, reliability of sales production and performance now is firmly an outcome of executive management strategy and a reflection of the decision-making abilities of those we place in senior management positions, reward and expect to be so accountable.

Secondly, we can start to reap the fruits of deeper penetration of insurance products, promised and torrentially brandished in the name of market capitalisation. This we have longed for over these post-capitalisation years.

Frankly, we have sought success without pains that go with the process of achievement in growing our industry in time past. Our current status also highlights that as underwriters or brokers we have had little influence and control over our success. At best, we have unpredictable results and continue to call glorified “order pickers” managers in our marketing force.

Fast-track to today, a few underwriters (no broker yet) have come to the decision that we can take control in the market, compete with the best retailers, increase premium production and create a win-win for all stakeholders in the market.

Truth be told, giving more money to NAICOM to do non-regulatory work of growing the market penetration would still result in nothing to show for it. NAICOM was not set up to create penetration; it is our role as insurance business enterprises – underwriters, brokers or agents. It appears obvious now that the growing of penetration in the insurance market is up to us and not any regulatory body or in fact any other organ set up by Nigerian government.

Now to those serious stakeholders (brokers included) who wish to take the gainful step of going retail, there is need for considerations and caution. It cannot be approached as “bull in the China market”. The result of such approach will be financial disaster or fruitless at best.

I suggest that you engage a consulting professional to work with you in this area. BPMSE Consulting, after years of research, study and consulting in this area, has developed a proven retail distribution development model called “BPMSE Retail Diamond”, or BRD for short, which you may choose to deploy.

BRD is successful in implementation with our clients who are evolving insurance retail distribution practice. The BRD works well with BPMSE consultative consulting approach or BCC which you may also deploy. Experience shows a combination of the two allows our clients to develop retail market understanding and go through the successful execution.

Now, introducing the BRD Model – There are 6 elements to consider in the Diamond Model:

(a) Vision alignment and organization – in this case you are expected to highlight purpose, expectations, communication and production as end goals of your retail business. These are driven by retail strategy, standards, systems, structure, staffing, sales, style and skills. The primary coordination of these 8-S are your executives, managers, marketers and your consultant.

(b) Theory of business – every retail business must have a theory of successful business. If you are not able to determine how you shape environment, mission and competence mix, you would face a lot of challenges down the road. No matter what you come out with, it would not be profitable.

(c) Retail business model – the dynamic retail must feature 7 inter-related model sub-elements referred to as the working focus of your retail strategy (what would make it an everybody, everyday strategy), communications, compliance, search for performance and your retail contact delivery method.

(d) Retail market competence – how do you evolve a learning retail organisation? What do you need to re-orient executives, advance leadership in unit retail managers and equip selling in retail marketing foot soldiers?

(e) Retail support systems – retail cannot work without a cohesive and comprehensive support system. Mostly to support the retail business model you have earlier detailed, you don’t have to copy what others have done, just what supports your retail business model.

(f) Retail performance management – there are 4 integrated performance quadrants (standards, measures, improvements and reporting). Many insurance underwriters and brokers companies are still measuring only the total sales premium from their retail attempts. This is not a good enough measure; it forms 1 out of 6 desirable measures required to have a good analytics of your retail business (research confirmed).

Finally, let us deal briefly with consulting approach. Before you engage a consultant, we suggest that you ensure that they make a presentation to you and your retail select team or executive management. Ask that they share their consulting approach with you. It is up to you to find the consulting company with the right approach for your retail business. The example inset (BCC) is fundamentally based on open exchange with clients and a collaborative steering to achieve retail market goals. The recommendations are out of experiential learning and the deployment involves rigorous testing.

In closing, entering into retail marketing of insurance is a very viable option. The opportunities are vast, if you know what you are doing and how to approach them. You stand to deepen market penetration, reduce sales cycles, increase productivity of marketers and maintain good market presence. One thing is clear: it is not the same as what is currently called “marketing” in our insurance industry of today.

Launching a successful retail business is not limited to the cash-rich or large insurance business, but for the underwriter and broker who purposes, plans and executes with the right approach. Each business and collectively insurance industry can make much progress in retail competition. 

 

Onadele is managing partner, BPM Systems Engineering Co. Ltd, Ikoyi, Lagos.

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