In a report released on May 24, the firm predicts that there will be fewer vertically aligned carriers that manufacture a complete portfolio of products, administer the products on their legacy systems, provide service for all customer groups, and distribute through their own network of reps and brokers.
"Vertically aligned carriers can only succeed if each "area" (product, distribution, administration, etc.) is given more competitive latitude or independence from the other areas and is able to compete without being constrained by what the other areas in the company may need or want them to provide," says the report.
Eastbridge Consulting president, Gil Lowerre, admits that this path may be difficult for carriers (or any business) to achieve as "there is always the tendency to look for 'synergies' from within."
In the 2020 model, successful carriers will either allow strategic units to have complete competitive latitude, "or the carrier will jump to the front of the change curve and develop an entirely new model," says Lowerre.
Source: Eastbridge Consulting Inc.
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