Lately, insurers have been advised by industry experts to establish a multi-channel distribution strategy. However, with the many changing and developing distribution channels—specifically in P&C—this may prove to be an even more complex feat, according to Conning Research & Consulting.

The P&C insurance distribution system has evolved to encompass many of the new ways of transacting business available to the customer, including new technologies and new forms of association and collaboration. Yet it is just this expansion of opportunity, and the lack of corresponding decrease in cost, that could well make the system vulnerable to disintermediation from external entities, according to a new study from the research and consulting firm.

"Each property/casualty distribution channel focuses on different elements of the insurance value chain," says Alan Dobbins, analyst at Conning Research & Consulting. "While each solves a customer need well, and adds value to the insurer-client relationship, the net result is a fragmented market for insurance intermediation. This situation, coupled with a compensation system that has not been effective at promoting cost savings, could well allow entities external to and independent of the insurance industry to disintermediate and redefine distribution for property/casualty insurers in the future."

The Conning Research study, "Property-Casualty Insurance Distribution: Focusing the Value Proposition, Embracing Change," presents the many distribution channels, analyzes their competitive advantages and their unique proposition to the insurer and the customer.

"In analyzing the current distribution landscape for property/casualty, along with the history of change, it becomes clear that while new channels and options continue to arise, there has been no significant culling of existing channels," says Stephan Christiansen, director of research at Conning. "While it is not clear which channels should fall out in this process, it is very likely that the industry will not sustain the cost structure of this complex system for much longer. In fact, the longer this expanded system continues, the more attractive it is for external forces to enter and disrupt the entire system."

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