Project Experience

Financial services…worries over "channel conflict" can stall efforts to explore alternative distribution channels, providing an opening for competitors.

Client Situation
Within the financial services industry, insurance companies have been particularly slow to move toward Internet distribution because of perceived conflicts with the agent model, as well as a belief that most insurance products require face-to-face sales. Property and casualty products were the first to move to Internet distribution, but the move was initiated by Internet startups devoted to overturning existing insurance distribution models, rather than the underwriters themselves. Only now are underwriters cautiously testing Internet distribution of property and casualty products; most still insist that direct distribution will not work with life and health products other than simple term products.

Fuld Approach
Our client sought an objective look at the current capabilities and future plans of its competitors, both traditional and non-traditional, with regard to the distribution of disability income products. In addition to interviewing multiple underwriters, we spoke with leading on-line insurance distributors to develop a full understanding of their business models and product selection criteria.

Benefits and Implications
Our research showed that, while disability income products as currently structured are poor candidates for Internet distribution, other product lines of significant importance to our client's overall strategy were being targeted for direct distribution. Our client used our findings to convince senior management that direct distribution merited a significant investment in order to prevent competitors from capturing market share. For more information on distribution strategies in financial services, please contactlscanlon@fuld.com.