Letter: Insurance moves

Sir: Today's announcement that insurers Refuge Group and United Friendly are to merge (9 August) is an example of British insurers facing up to the major transition which is taking place in the insurance market. The UK alone has seen the number of people employed in the sales forces of insurance companies fall from about 220,000 in 1936 to around 80,000 this year with further falls anticipated.

It is also evident that the European market is now starting to experience many of the changes that the UK has been facing in recent years. The market overall is moving from being largely regulated to one that is highly competitive and deregulated.

In Europe, EU insurance directives now mean that insurance companies can sell their products in any other EU country. Also, there is growing competition from the banking industry and telemarketers.

Many insurance companies on the Continent are beginning to wake up to the challenges that lie ahead of them. Therefore any potential lead that UK companies have in experience of exploiting the changing market will soon be eroded. Sadly, there are still too many insurers who have not invested in developing adequate plans and as a result many will fall by the wayside. Estimates vary, but, for example, there are only expected to be about 30 significant life assurance product providers by the turn of the century.

To succeed in the future, insurers must win on four battlegrounds: selecting markets, understanding customers, risk management and positioning to execute business strategies. As the market becomes more competitive and customers more demanding, insurers need to invest in new distribution and servicing systems and generally improve their overall offering.

ROCCO SEGRETI

General Manager

Insurance IBM EMEA

Feltham, Middlesex