When we consider the set of insurance companies based in the United States, there seem to be six types striving to succeed in their particular marketplace :
- Local: this type of insurer offers its products and services to a few counties or perhaps one state
- Regional: this type of insurer offers its products and services to two or more states
- Super-Regional: this type of insurer offers its products and services to most, if not all, of the states in a specific geographic region as defined by the U.S. Census (e.g. Midwest or Mid-Atlantic)
- National: this type of insurer offers its products and services throughout the entire United States
- International – Adjacent: this type of insurer offers its products and services throughout the US and to either Canada or Mexico (or both)
- International – Broad: this type of insurer offers its products and services throughout the US and to one or more countries around the world
As insurers in the US decide how to expand geographically to reach more customers there are several matters they need to deal with:
- Diversify risk: I would submit this is one of the primary reasons – along with economies of scale – that drive an insurance company to widen their geographical reach
- Manage more regulatory requirements: One of the pleasures of being regulated by 50 state insurance commissioners is that once an insurer has met one state’s regulatory regime, it has met just that one state’s regulatory regime
- Become locationally intelligent: expanding the reach of the insurer’s products and services to different markets mandates that the insurer becomes intimate with the consumer and business demographic profiles of that geography as well as with the skills and expertise of the available distribution channels, the economy of the geography, and the actual terrain of the geography (i.e. to better assess property risks and liability risks if the insurer is a property/casualty insurer)
- Widen distribution channel mix: Unless the insurer is using online methods to reach, sell and support their products, the insurer moving to wider geographies will also need to appoint agencies or brokers in the new geography and create new field offices as well
- Leverage product offerings: it is quite possible that the insurer can apply its same products – albeit with changes required by the state insurance commissioners’ offices – in the new geography as it sells in its existing markets. But the insurer should also take the opportunity to ‘tune’ its products and services according to its locational analysis of the new markets
- Create location-specific customer service: prime example at play here is moving to minority-majority areas where mere translation of its marketing materials is far, far from being sufficient. Additionally, the insurer should have producers in its distribution channel mix and customer service representatives who are from the cultures being targeted in the new geographies.
What would you add to these lists?
Rabkin's ROI 
Barry:
Good Afternoon.
To your list of insurance carrier “types”, I would propose adding those who target certain affinity groups (e.g., USAA) and those whose model is predicated on a membership platform (e.g., AAA). While these groups do not fit neatly in a geographic context, they do cross over the gepgraphic sets.
The challenges you outline in the second list certainly apply to the two groups I’ve mentioned, and are possibly even magnified in those groups.
As to the challenges of geographic diversity, I believe the more nimble carriers focus on leveraging state of the art IT (rules engines, exception processing, agile development, BPM and the like) and have developed a presence in all customer facing channels.
Good catch. I like your additions. Or perhaps we can rethink the list more of as a 2-dimensional matrix (for now, realizing there are probably other important dimensions) with my initial geographic list on one dimension and your types (or target focus) as the second dimension. So, as you suggest we have affinity groups and membership platforms as two values of types with possibly a third type being ‘any market’.
A possible third dimension might be segment (e.g. personal lines p/c, commercial p/c, individual lines life and annuity, group life and annuity, health insurer, …)
So, the result of these dimensions becomes a ‘choice board’ or more refined definition of the insurance industry space. And then we could use this space to reframe competitive and market dynamics as well as technologies that are or could be in play within each ‘cell’ or species in this marketspace.
I think I better quit before I get this too complicated.
But, again, good catch … good additions.