Romania is just at the beginning of the cycle of insurance distribution diversification
 CEE and CIS insurance markets are entering a new stage in the market
evolution with a sharp increase of new distribution channels. For the
life segment, bancassurance and IFAs will have the largest evolution
while property&casualty insurance distribution will head towards
brokers, affinity business, direct and bancassurance channels.
Regarding diversification of distribution channels in insurance, Romania
is placed, along with Russia, in an emerging stage, over 80% of premiums
written through tied-agents, according to a study presented by the
Oliver WYMAN company, member of MARSH & McLENNAN Group, at a bancassurance
conference held in Prague last week.
For the transition from an emerging market to a semi-mature one and also for fructifying the development opportunities of cross-selling and up-selling resulting from insurance distribution channels' diversification, Romania has to reach over some thresholds.
"The most important are the developments required to macroeconomic level, increasing the education of the clients and of the population in general regarding financial protection, as well as professionalization of the insurance sales employees", Bernhard KOTANGO, Partner Financial Services, Oliver WYMAN has explained.
"Emerging markets have a number of new opportunities in professional IFA and bancassurance, especially in more developed urban areas to diversify the distribution channels for life insurance segment. Also, ensuring control of new distribution channels, while professionalizing agent channel is the key challenge in emerging Europe", the Oliver WYMAN representative added.
The next stage of evolution of the distribution of life insurance involves a reduction to 50% of underwriting through tied agents and increase underwritings through bancassurance and brokers and is characteristic to developing markets in Hungary, the Czech Republic, Poland and Germany. Mature markets such as Belgium, Spain or France rely in proportion of over 60% on bancassurance and intermediaries, while in super-mature markets - the UK, USA and Austria - the insurance companies take under control a large proportion of alternative distribution channels.
For non-life segment, the current pattern of distribution of emerging markets - about 80% tied and multi-tied agents and 20% brokers - is followed in this cycle by an increase to 40% of the underwritings made by brokers, bancassurance and affinity - the present situation in Poland, the Czech Republic and Germany.
Next stages - mature markets and super-mature markets - imply according to the Oliver WYMAN presentation an increase up to 70% of the alternative distribution channels and an increasingly control on agents and direct sales, along with diversified channels - brokers, bancassurance, affinity and, in the end, complex distribution platforms.
Author: Andreea IONETE
on 02.10.2008
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