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 there are too many different products. Increasing the number of different products in an organization causes higher costs. This theoretical organizational principle is to be seen currently in Allianz in reality.
The original aim to offer many different products is to serve more individual needs of customers. But it is expensive because of the different production processes. It becomes especially expensive if the mass market property-casualty is served – as Allianz is doing – that automatically creates a large number of special wishes.
The situation in property-casualty for Allianz is exacerbated because the production processes of these more or less individual products tend to be complicated. The assigned workplaces – staff & tools – are special and too many workplaces are part of the processes.
At time being, however, in the time of laptops and smart phones, customers themselves cannot cope with many and very individual products, they feel confused if many decisions have to be made.
So in regard to costs the all over result of Allianz is to be seen in the expense ratio of 28,7 % (2017, sales plus administration costs/premium). That is above industry standard. What’s to be done?
Solving 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 the complexity of the (so far very individual) products has to be reduced in order to simplify the buying process of the customer and to pare down the long production processes.
3 the workplaces – staff and tools (IT) – should to be enhanced. On one side improving the tools of the workplaces, i.e. installing more powerful software with access to a wide range of databases and on the other side training the staff to work with the new tools.
These steps well done would enable the organization to do more customer oriented work. Now a workplace could handle quite a number of products the customer might have. Utilizing telephone and computer the staff will have the technical prerequisites. With additional legal and insurance liability training the offices personal can be endowed with the necessary authority to do concluding service on the spot.
These tasks accomplished should reduce costs substantially and secure better standing in the market.
However realizing this new organizational structure will not be easy. The current internal organization structure is, according to Oliver Bäte (CEO) in Süddeutsche Zeitung on Jan 17, 2019, still traditional, that is along product groups / branches. Agents with restricted technical tools and restricted authority still are close to the customers. They are expensive and changing these formerly successful processes will be very difficult.
But these suggestions apply to mass market products. The new organization structure will serve a large part of the Allianz business. There are however in different branches quite a few high volumes customers who still must get very individual service.
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
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