The change occurring in traditional business roles, and to some extent the outright turmoil this is causing in certain quarters of the property and casualty insurance industry, continues to hold centre stage at professional gatherings.
Preparing for the future, dealing with new technology, merger mania and how to strike strategic alliances have been served up as the main intellectual courses for what has seemed to be an endless stream of industry seminars and debates over the past year. No doubt they will continue to head up the menu in the year ahead.
Unfortunately, these forums have come to provide a repeated message with little in terms of reaching a conclusive action plan. In a sense there is a temptation to almost see these gatherings as being “marital guidance groups” in dealing with an imminent and traumatic partnership split-up.
However, in my musings, it occurred to me that possibly there is no single action plan to deal with change, that in fact, the term “change” does not represent a single event (such as bank invasion into the p&c market) and therefore cannot provide a simple off-the-rack solution. Suddenly, excited with this simplified but effective spin of thought, it also struck me that change is not just a once-off event but a process that has been, and will always be, a driving force promoting economic and business advancement, including the growth of the p&c market.
With this in mind, I became embroiled in the usual discussion of “dealing with change, where are we going” with a senior insurance executive at a recent industry seminar. Through this debate, he likened the current shake-up of the industry to a bowl of salad tossed up and the ingredients left to fall back with little order or relation to the placement of the other greenery. The point of the analogy being that traditional relationships are breaking apart and the borderlines between the business areas erased. An obvious outcome of this is that the “name tags” of the different parties, whether they be independent adjusters or brokers versus internal services and alliances between market entities, or reinsurance versus primary company business, are being thrown out with the discarded seminar name tags.
Recent “big is better” merger deals and alliances established between underwriters and distribution networks such as the ING/Equisure and General Accident/Vector investments over recent months are prime examples of these changing values.
It would be foolhardy for me to suggest that these developments are not significant and relevant to the future direction of the p&c market. However, I do contest the view that change has been sprung on the market, that the current shift taking place is too much to deal with, that the industry is about to face its “Armageddon”.
Change has shaped the industry for decades, whether this has come in the form of adapted legislation or market opportunities having opened the door to new players and created new business roles.
However, what was once new has to eventually become traditional, all of which forms part of an ongoing cycle of development as new opportunities and business practices evolve. As such, I do not believe that any one particular party within the industry is at the point of facing extinction, but rather, that the players will adapt to the changing environment when, and through whatever means is required at the time. However, the players who will adapt successfully will be those that stay in tune with market developments and avoid the temptation of burying their heads in the sand.
The real risk is complacency. Relying on traditional rights and assuming a guaranteed position at the table is a quick way of ending up on the “endangered species” list – this encompasses all segments of the business, from independent adjusters and brokers through to underwriters and the professional associations. But, whatever shape and form p&c finally takes through the current rationalization cycle, it will, I am confident, become one more chapter out of many still to come in the great book of insurance in Canada.