The insurance industry is at an evolutional cross road.  It needs to decide its future direction; this choice may lead to survival and a prosperous future or a reconstitution of the industry with some facets potentially disappearing.  The area at greatest threat is the retail sector as it seems largely incapable of producing cost effective products that meet the needs of the clients at the right price.

The hard market of the last few years has been difficult for buyers of insurance and the retailers in the insurance market.  Little thought is given to the actual cost and value of the product, indeed year on year survival seems to be the only agenda currently in operation.

The insurance purchasing decision is vital to the risk management function within the firm, indeed it is an outcome of good risk management and one of the five major methods of risk transfer.   The industry needs to design the right products that fit the needs of the market today, a large proportion of insurance products on sale are out of date and rely on out of date for pricing and implementation.

It is little wonder that there is a great emphasis on the viability and operation of captive insurance companies and needs analysis occurring as to the methodology that sits behind their viability.  More and more players in the wholesale market are finding a niche in supplying management skills for captives to allow their potential to be harvested.

The retail industry needs to break the mold and look at the needs of today's buyers with the emphasis on risk management.  Less and less of the value of the firm is being insured or capable of being insured in the modern market.  This means that where the insurance purchase was a process until recently with rollovers affected as a normal part of business with little attention, now it is a deliberate decision based on cash flow analysis and value versus risk and return.

The solution is basic, look at the range of available products benchmark them to the needs of the modern market and adjust the characteristics or features of the products to enhance its added value to the buyer.  In other words the purchaser can view the insurance purchase as an investment in survival rather than a direct charge against cashflows.

Wishing you all a safe and happy Christmas and New Year.