THE European insurance industry is trying to adjust to a brave new world. The introduction of the third insurance directive has opened tightly regulated markets such as Germany and Italy to insurers authorised in other European Union countries, and telemarketing is attracting increasing attention.
Takeovers and joint ventures provide one route into foreign markets, but the establishment of a direct sales subsidiary offers a relatively cheap, and at least superficially, attractive alternative. Firms in Europe's most liberal insurance markets have shown that telemarketing can be hugely successful.
In Britain, there are half a dozen competitors. They are led by Direct Line, owned by Royal Bank of Scotland, Churchill, a subsidiary of Switzerland's Wintherthur, and Admiral, the Lloyd's of London direct motor insurer. In the Netherlands, telesales are dominated by Centraal Beheer.
Telemarketing in these countries began in the early 1980s. Now other European insurers are about to follow suit. Tellit, owned by Groupe Suez and operating in Germany and France, was launched last year. Zurich, the Swiss giant, announced earlier this year that it would establish direct distribution channels across Europe.
Other insurance groups, including the UK composites and big Continental players such as UAP of France and Italy's Generali, are also exploring cross-border telesales.
"There is going to be a huge battle for the consumer," one insider says. "Any group that wants a European presence is putting resources into telesales." He thinks the UK firms' home experience will give them a big advantage - his own group expects to be operating in Germany by 1996.
Generali, Italy's biggest non-life insurer, is planning new direct distribution methods, including telemarketing and direct mail, in its home market.
Italian insurance sales are dominated by local agents and small regional brokers. The abolition of regulated tariffs by the third insurance directive is creating the opportunity.
Direct Line, Britain's biggest telephone insurer, says it has no immediate plans to expand on the Continent. It has, however, been approached by several Continental insurers suggesting joint ventures.
At a recent conference in Paris, direct sales - and the success of Direct Line - were singled out several times by Jacques Friedmann, chairman of UAP, the biggest French insurer, as likely to be a key trend for the industry during the 1990s.
IBM, which recently commissioned research on telemarketing for its insurance company customers, forecasts that sales from telemarketing in Europe will jump from $2.2bn to $7.6bn by 1998. The prediction is based on a survey of big insurers' own plans.
Germany, once tightly regulated with minimum premium rates in the past, is still the most tempting market. It is also Europe's biggest market. Italy comes a close second.
The advantage of teleselling straightforward products such as car insurance or household contents policies - which are likely to take the Continent by storm in the next decade - is the low costs involved. Direct Line's overheads are only around pounds 15 for every pounds 100 of …