Study Shows Integration Could Save European Insurers $4.4 Billion

A new study by A.T. Kearney, EDS management consulting subsidiary, has concluded that “Europe’s 11 largest insurers could save more than $4.4 billion (5 billion euros) per year by integrating products, services and operations across Europe.”

The study indicated that, while Europe’s insurers do recognize the benefits which could be achieved by greater integration, they seem to have made little progress toward achieving it. While legal and economic factors are usually cited as the reasons holding up progress, Kearney found that “the insurance giants ranked language, cultural barriers and social constraints as the main factors keeping them from maximizing their efficiency.”

Leonard Koningswijk, an A.T. Kearney V.P. and co-leader of the study observed, that subsidiaries are generally left alone “as they are seen as too different to easily consolidate activities.” The result is missed opportunities, but the causes are more subtle.

“Servicing and claims handling are still done on a country by country, or even brand by brand,” Koningswijk stated. “Many insurance companies’ costs are labor related, so there are implicit staff implications as well.” Insurers basically avoid making changes which will result in layoffs, and quite likely in adverse publicity.

The Kearney study also determined that, while most of the companies saw brand harmonization, increasing use of the Internet, and centralizing operations in the future, few were actually taking steps to make it happen, except for large commercial risks. Only one of ten companies was actively pursuing these goals for medium and small commercial risks, and only two companies “were currently using a single brand across Europe.”

Topics Carriers Europe