Creating Profit Through Alliances - business models for collaboration E-book | Page 35

How is this alliance structured? The concept of the
insurance, including coverage and fees, was
developed by De Goudse. REAAL arranges the
distribution through its intermediaries and takes care
of all commercial activities. De Goudse draws up the
policies and handles all the administration and
claims. For these kinds of insurances REAAL works
exclusively with De Goudse.
The financial model differs somewhat for the two
kinds of insurances. For the employers' insurances
bearing the risk of payments for up to two years of
illness, REAAL is paid a fixed percentage as provision.
De Goudse carries 100% of the risks of the portfolio.
There is no bonus structure, but REAAL shares in the
profits of the portfolio, not in the losses.
For the employees' insurances after two years, the
portfolio risks are shared. De Goudse accepts new
customers, but REAAL is consulted whenever bigger
risks are involved. De Goudse gets a percentage of
the fees to cover the costs of administration, and
every quarter the portfolio results are shared with
REAAL. These results are calculated as the insurance
fees minus costs and damages, plus the mutations in
funds due to reservations and investment results.
Costs for product development and IT for De Goudse
are traded off against the sales costs for REAAL.
Provisions for the intermediaries are directly
deducted from the insurance fees.

The agreement is not perpetual: every three years
the parties can decide to break up. In that case an
external party will estimate the value of the portfolio
and each party can bid on it. Up to now the
investment results have been good.
The prices are set by De Goudse, and are no different
than those for their own sales or for other partners.
Discounts are decided on together. Even volume
discounts that customers of REAAL get are shared
with De Goudse. Frank Rensen: "I think the power of
this alliance lies in the processes that are clearly
described, combined with sufficient room to interpret
them in a practical way. Before 2008 there were only
meetings at board level, but that was not enough to
make the alliance successful. At the operational level
the alliance was not perceived as important. Rene
and I started holding regular meetings in 2008,
speaking to each other every week. We put a lot of
effort into communicating the purpose to the sales
representatives and into making the processes run
smoothly. That has had a clear impact, but we still
have work to do. The portfolio has grown since 2006,
but not as much as we wanted to see.
REAAL hardly has any other alliances, but for De
Goudse setting up alliances has become part of the
strategy. Rene: "The goal has been from 2009 to start
one or two distribution alliances each year. We prefer
to take the lead rather than being approached, and
with our board and part of the management we
select the parties that we wish to collaborate with."

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