Insurance Innovation Reporter: Could an Insurance Company Become the Next Sears?
On July 11, 2019, Insurance Innovation Reporter published a commentary column by Stephen E. Applebaum, Managing Partner, Insurance Solutions Group, where he discusses whether an insurance company could become the next Sears? Major brands disappear from the market. Sears joins a list that includes Kodak, Nokia, Xerox, Polaroid, Blockbuster, The Sharper Image, Enron, Yahoo, Radio Shack, Motorola, Toys R Us, etc. How likely is it that a major insurance brand will disappear from the market? This column is a worthwhile read for anyone interested in corporate strategy.
In the private passenger auto insurance line of business, Geico has overtaken Allstate to take the #2 spot and is closing in on State Farm. Geico has stated its intention to overtake State Farm in the near future. State Farm or Allstate are not at risk of going out of business anytime soon, but it shows the market trends that could over the longer term displace carriers who are not paying attention.
Consolidation among insurers is one of the many ways that insurance brands will disappear. American Family, the 10th largest U.S. auto insurer, recently acquired a number of smaller competitors including Ameriprise Auto & Home, Main Street America, The General and Homesite. Insurance carriers who recognize and comprehend the implications of all of these trends are already making strategic plans to defend themselves. State Farm is in the midst of a long-term restructuring plan that will see it shed thousands of jobs and consolidate its facilities into three major U.S. operational hubs.
As an ironic side note, Allstate—originally the name of the tire brand of Sears, Roebuck and Co.—was founded by that company in 1931 and sold in its tire and battery department. It was spun off as an independent company and went public in 1993. Major insurance brands may not disappear anytime soon, but their dominance and longevity can no longer be taken for granted.
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