Multinational customers are good business, but insurers face a few hurdles first, says Dane Loosley
' Today all industries are to some extent global and within the insurance industry a few firms have achieved multinational status.
Multinational customers need a wide variety of insurance products to cover their global activities. In this wide area of operation they need the benefits of risk diversification, where claims, product groups and operating risks vary throughout the world.
But there are pressures and problems in being a global insurer. Entering developing markets the insurer is vulnerable to political instability, weakness and reversal in the democratic institutions that promote free trade and capital movements.
Very often governments will be looking to push social responsibility and benefits on to the private sector ahead of profit streams.
Regulation can be restrictive, demanding inward investment of the premium income within the country's borders, or a requirement to work with joint venture partners, which may or may not be part of the financial services industry.
These partners can have very different cultural and strategic values and objectives.
Global insurers are continually striving for economies of scale whether it's in their operations or in their corporate procurement, which of course involves the payment of claims.
So what now are the implications of globalisation for the supply side, particularly the motor repair industry? Will there be a global motor repair industry?
This may not seem so strange a question given that car production is global. Manufacturers seek to exploit universal design, technology and production methods into global markets.
Even so, we've seen very different demands in repair quality and the add-on customer services that go with the motor repair within the EU market. There is considerable difference in the structure, type of suppliers and their relationships with work providers between developing markets and those in established countries.
The former tend to see the benefit of collaboration and building long-term sustainable relationships, whereas in the developed countries these relationships are very much confrontational and focus on short term cost cutting gains.
Leveraging discount in procurement and supply chain management makes some in the motor repair industry nervous. Is it a threat or could it be a benefit?
There will undoubtedly be leverage advantages of scale but focusing on customer needs is crucial whether you are a local repairer with a well-established customer base, or an insurer seeking new markets and new opportunities.
If we do not supply the customer with a product that is affordable, a method of purchasing that is convenient and a service that is desirable, we will undermine confidence in our industry to all our detriment.
Insurer and client are both faced with a complexity product whether it be increasing vehicle repair technology or using new materials, or for the insurer a shift in risk patterns, the rise of new ones and increased regulation.
We need to focus on relationships, and building those relationships, whether it's the sales outlets or on the supply and service side. They need to be sustainable, seamless and collaborative by nature. This is the true win-win situation.
And that is one of the positive outcomes of globalisation and free trade. It has at its heart the principle of bringing diverse individuals and activities together in a spirit of cooperation to the mutual benefit of all participants. IT
' Dane Loosley is motor damage claims manager at Allianz Cornhill Insurance
