Change is the only constant in this world, they say. But when it comes in such a magnitude, it needs to be recognized, talked about, analyzed and acted upon. The US healthcare system is seeing a shift from wholesale to retail side. It has a definite impact on the insurers and so on the dynamics of the health insurance industry in the country. The question is: are the insurers ready to tap the changing market that could mean change in strategy and planning, and perhaps the organizational structure also?

When we talk about wholesale side and the retail side, the level of decision-making authority and financial responsibilities are considered. Financial responsibility of individual consumers would mean retail side while responsibility of the intermediaries of these consumers would mean the wholesale side. With the implementation of healthcare reforms, individuals will be encouraged to make decision about the health insurance products they want to choose and buy even if their employers offer the coverage to them. This encouragement brings tremendous change in the way insurers sell health insurance, which traditionally focus on the wholesale side of the business…


According to a report by McKinsey, around 40-45% people in the United States make the decision of choosing their health insurance providers. The report estimates that by 2011, $550-600 bn of insurance premium will be in the hands of individual decision makers—a huge growth of the retail side of health insurance in the United States.

What insurers can do?

Insurers need to be very proactive in order to grab the market-share during this shift. Without doubt, US health insurers are constructed and brought up with wholesale side in view and as the focusing point of all the strategy. Their competency, organizational structure, and even the mind-set have been shaped according to the wholesale planning where they have to deal with companies and not individuals. While dealing with individual customers, insurers in the industry would need to adapt quickly to the demands of product management, customer service, risk management, retail distribution, and developing strategies to retain the customers.

Insurance companies need to develop new competencies to tap the market and retain good hold of it. Product innovation will be an area to look at where insurers might need to increase the product base offering more innovative products that could reach individual consumers. Retail distribution will be a major challenge where insurers will have to manage retail channels, improve marketing and branding and generate tremendous amount of sales because the employer-sponsored market will shrink for them.

At the end, insurers must provide an unforgettable consumer experience to retain the customers for future business development and growth. This could be achieved if the consumer is delivered quality services with maximum amount of attention being put for its benefits. If insurers can preconceive such impending obligations and changes hitting their business, they can do well and retain their business without much hiccups or disastrous measures to be taken.

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