There are many ways to distribute products. This month, Greg Becker looks at ideas from South American power utilities.
This is not the only successful utility distribution initiative in South America. Similar examples are available in Ecuador, Argentina, Chile and Colombia. For example Codensa, the largest electricity provider in Colombia, follows a partnership model where it sells insurance products together with Seguros Mapfre, a Spanish insurer.
Between 2001 and 2008, they have insured 300,000 Codensa clients, selling both simple life products (such as funeral cover and short-term family income benefits) and general insurance products (such as extended warranty cover on consumer goods, home insurance and personal accident cover).
The key to the initiative’s success is that both firms brought together their complementary skills, with Mapfre bringing product manufacturing expertise, and Codensa bringing its customer base and knowledge of its clients.
Predictive analytics (the use of data and various statistical techniques to make predictions) can be built on many different data sources, and non-traditional insurance distributors may have significant data warehouses that can be proactively targeted and leveraged.
Many believe that the RDR will lead to new distribution channels emerging in the UK, and the developments within supermarkets support this assertion. ABI statisticians analyse their data by distribution, classifying sales as being either ‘IFA/Whole of Market’, ‘Single Tie’ or ‘Non-intermediated’, and they make special mention of ‘Bancassurance’ sales.
It will be interesting to see what categories they will use to breakdown their statistics in ten years’ time: ‘Fee for advice’,‘Commission-driven IFA’, ‘Aggregator’ and ‘Execution-only direct sale’ – with special mention of sales by ‘supermarkets’ and ‘utilities’, perhaps?
Maybe not, but stranger things have happened. Ask your local travel agent or bookstore, or those at Kodak: a famous brand that has had its moment and is now seeking bankruptcy protection.
With thanks to Joop Korver of Bengrip for insight and assistance. Greg Becker is product development actuary at RGA
