Flexible operating models and partnerships in insurers and the FS market

With economic growth flat or negative across the developed world, companies large and small are looking to the emerging markets of Asia and South America to fuel the next stage of their business growth. This growth in emerging markets is expected to continue, with Swiss Re predicting half of the growth in the global economy over the next five years coming from emerging markets.

Whilst retail brands have actively capitalised on this growth, insurers have lagged behind when it comes to maximising the potential of developing markets, many preferring the comfort and familiarity of the home markets.

Unfortunately, as a long term strategy this is unlikely to lead to business success. According to Swiss Re, insurance premium volumes in emerging markets have increased by 11% in real terms over the last decade. This compares with only 1.3% in developed economies. With this growth expected to continue and underinsurance still a major issue in these regions, emerging markets are likely to present a significant opportunity to insurers keen to grow their business over the coming decade.

The Challenge…

This growth presents insurers with a challenge, how to enter these high growth, emerging markets and develop profitable businesses outside of their traditional geographies. One option would be to enter as a new brand, using the company’s international reputation to sell to the new market. The other option is partnering with a local business, either through joint ventures or distribution deals to help grow market share.

One example of an insurer that has successfully used the partnership approach to grow their business in emerging markets is Ageas. They have used partnerships both to gain market share and enter new markets where regulation prevents direct entry for foreign insurers. For them, this approach is the obvious one to follow due to the costs involved in trying to go it alone.

As Ageas CEO, Bart De Smet, highlighted “it’s not easy fighting local champions, and it would involve a huge investment. We’d rather work together, because partners know the market and enjoy the confidence of consumers. Moreover, there are some countries in which, as a foreign insurer, you are required to work with a local partner.”

Distribution Partnerships

Others have taken a slightly different approach, partnering with distributors in other industries to enable them to get their products out to new customers. BIMA, the disruptive micro insurance company has used distribution partnerships to reach over 20 million customers across 14 countries. BIMA partners with mobile phone networks across developing nations to provide insurance products to their customers both as bundled and stand-alone products.

Through their partnerships they have been able to develop a successful, profitable business from a section of the market where this was considered almost impossible. With the mobile phone insurance market experiencing 263% annualised growth (Source: GSMA) BIMA’s ability to partner effectively is no doubt one of the key reasons for its success.

The challenge for many insurance executives, however, is not that they don’t see the growth potential of emerging markets, but how to enable these partnerships to work successfully.

Enabling Partnerships & JVs for Success

The first step is to find a partner that shares the same strategic vision and cultural values as your organisation, so that you can successfully work towards a joint business goal.  But this is only half of the equation; the second half is ensuring that your operating model allows for the development and integration of a partnership business.

As shown by the likes of BIMA, having an operating model and technology infrastructure that enables partners to integrate easily with your organisation is critical to developing effective partnerships and Joint Ventures. Insurers need to be able to easily provide access to the parts of their organisation and infrastructure required to ensure success, whilst being able to limit access to more sensitive areas they may not want to share with their partners.

Insurers looking to utilise the partnership/Joint Venture approach to enter emerging markets should focus on making sure that their operating model, infrastructure and governance framework are set up to enable easy integration with potential partners before pursuing these opportunities.

Without this, firms face the risk of potential issues and even failure as key elements of their organisations are unable to deal with the unique requirements that partnerships demand.


Alex is a founding partner of Gate One. He has extensive experience of hands-on delivery of high profile, complex global transformation programmes, governance of £multi-billion change portfolios and building organisations’ capability to deliver change themselves.