Integrated Distribution of Insurance and Financial Services and Value Creation: Challenges Ahead

This contribution originates in the ideas and discussion held during the first meeting of the Montepaschi Vita Forum on “The Paradigms of Value: The Integrated Distribution of Insurance and Financial Services”, held in Rome on 18 October 2002 and co-organized by The Geneva Association. The Forum was prompted by an awareness of the critical role and nature of the topic of the “paradigms of value” in the present competitive context of financial services. Value creation mechanisms are key elements of financial and insurance services, both in the interests of shareholders and, in broader terms, of all stakeholders. It is a fact that insurance and financial services are going through a phase of deep change. The integration between banking and insurance services and their integrated distribution, after the big push given by convergence, are facing a critical stage. The present article reconstructs the “stylized facts” of the present integration phase between banks and insurers, by outlining main trends and future scenarios with regard to: the integration models between banking and insurance services, ranging from co-operation and “alliance” agreements to integrated groups; the integrated distribution of banking and insurance services with the aim of offering a full range of products within various organizational models from bancassurance to assurbanking; and the “new distribution” type of bancassurance, comparing national models and distribution scenarios. In the last part, by assessing future trends in the competitive environment of the insurance industry it is explained why bancassurance, far from going into decline, will face up to tougher competition and a clear-cut divide between winners and losers. In this regard there is no doubt that “integrated distribution” is affecting, and will continue to affect, the various actors in traditionally separate businesses, by following many models and experiences, different trends and scenarios according to the dynamics of competitive structures and regulatory systems. Successful groups will be those able to base their own organization, apart from the chosen approach, on the only factor that can guarantee value creation: clients. The Geneva Papers on Risk and Insurance (2003) 28, 481–494. doi:10.1111/1468-0440.00238