Allianz is realizing it has very many, too many, different products. This is true for most branches, e.g. in Legal Protection Insurance there are ca. 60 different products and even in its high revenue property-casualty portfolio are too many different products. Increasing the number of different products in an organization however are a cause for higher costs. This theoretical organizational principle is to be seen currently in Allianz in reality.
The original aim offering many different products is to serve more individual needs of customers. But that is expensive because of the many different production processes:
- In the buying process quite a few steps have to be installed to form the individual product, which in the time of laptops and smart phones are operated by the to-be-customers, many customers however are annoyed by that lengthy procedure. In the past it was executed by a professional agent.
- And in cases of loss these steps/operations have to be part of the production process too. The production processes of these individual products are complicated and long. The assigned internal workplaces – staff & tools – are numerous and must be furnished with special tool (e.g. software-applications).
As allover result of Allianz shows an expense ratio of 28,7 % (2017, sales plus administration costs/premium). That is above industry standard.
What’s to be done to solve these problems?
1 the number of different products should be reduced. This gives on one side (potential) customers a better overview over the product portfolio and leads more frequently to actual buying decisions, as scientists at the University of Tübingen have found.
2 for losses a close view has to be cast on the length of the production processes, if many different products remain the production process has to be pared down additionally by enhancing workplaces – staff and tools. Improving the tools of the workplaces, i.e. installing more powerful software is one task and on the other side training the staff is necessary to work with new tools.
These steps well done would need less organization-levels and facilitate more customer oriented work. It’s in fact a key issue of Oliver Bäte, CEO of Allianz. One workplace could handle most of the products the customer might want to have. Utilizing telephone and computer staff will have the technical prerequisites. With additional legal and insurance liability training the office personal can be endowed with the necessary authority to do concluding selling service on the spot, thus securing better standing in the market.
As a new development in 2020 however the organization is returning to branches Europe wide. Reason: same products can be sold in many European countries, thus the customer/country organization isn’t deemed to be necessary in all cases. – If that really works only future will tell.
These products and this company structure is designed for mass market customers. It will serve large part of the Allianz business. High volumes customers however with very special needs must still get very individual service and products.
P.S.: These considerations are based on public information in the media. They are to illustrate theoretical findings. If the used assumptions prove to be different, different conclusions might be logical.
— More? See: Business Organization System Theory
— Comments ? See: “About”.