Last week, Danske Bank revealed it was selling its entire insurance operation – Danica Pension. This redraws the map completely. This completely redraws the map for the battle for customers within long-term savings. We are not analysing the reason for the sale but still confirm that Danske Bank after the sale will still has an efficient distribution tool and “own” their customer relations. They will be able to create an insurance marketplace where there are a number of insurers and create effective offerings related to insurance and long-term savings for different customer segments. We have written about opening value chains and the insurance market as a natural continuation of the change in the value chain. Please read our interview with Jan Ridderwall about an “Open architecture for better offerings to the customer” and our article “From closed to open value chains”.
For potential buyers it is of course important to ensure long-term access to Danske Bank’s distribution too for generating premium incomes and to streamline administration in order to lower costs. The table below shows that Danica is one of the bigger companies in the competition-exposed market for pensions.
Otherwise, during the last 15 years the majority of the companies’ business has focussed on consolidation among insurance and bank assurance companies. There are certainly different reasons for the acquisitions but increased premium incomes/market share appear to be one of the driving factors rather than streamlined administration. It is demonstrated in the analyses we made of the companies’ operating costs. The compilation below shows some of the acquisitions/mergers of the companies we are following:
2012 – Folksam – Salus Ansvar
2012 – Skandia Liv/Skandia, Folksam/Aktia Skadeförsäkring
2009 – Moderna Försäkringar/Aspis
2008 – Folksam/KP
2007 – Storebrand/SPP, DNB/Salus Ansvar
2006 – Old Mutual/Skandia
2001 – Handelsbanken/SPP, Folksam/Förenade Liv
2000 – Sampo/Leonia, Folksam/KPA, Unidanmark/Vesta
1999 – Unibank/Tryg Baltica, Sparbanken Nor/Gensidige
1998 – SEB/Trygg Hansa
In addition a change appears to be on the way on the Swedish market. The Norwegian DNB wants to sell its Swedish insurance company SalusAnsvar. According to the article, the life business has not developed as the owners desired.
The challenges for the industry will continue and we are convinced that we will get to see many changes among the actors’ business models when they position themselves in the new value chains. Previously this year we saw that Folksam sold off its stock in IPS to Indecap. Several actors have decided to no longer offer traditional insurance as a product. The Government created a new form of saving, the investment savings account for long-term savings from January 2012 and the Finance Minister Peter Norman was clear that he expected that the financial packaging would be free.
We are convinced that it will become increasingly more important to have a clear focus on the whole business. Of course the components that will create the value offering for identified customer segments, distribution channels and income models. But in order to be flexible in one’s offering we are convinced that the right processes, competences and IT systems must be secured in order to make the administration as efficient as possible so as to generate the results required. No matter whether it is the shareholder or insurer who is the owner.