Skip to main content

Lessons from the coal face

How to achieve successful insurance business integrations

Mergers and acquisitions, strategic alliances and joint ventures are insurance buzzwords as the industry grapples with the need to build economies of scale and operate efficiently in a new fast-paced, technology-driven environment.

There is significant merger and acquisition (M&A) activity among insurers, brokers and underwriting agencies in the Australian market.

The industry has some excellent success stories with M&As and similar relationships and partnerships that have achieved their business goals. But there are also deals that have soured for a wide variety of reasons.

Frazer Walker has been assisting the insurance industry (and clients in other sectors) to manage integrations since it was established in 2002.

Frazer Walker Partner Nick Careless says the key to getting integration right is to establish a clear, unified perspective at the start on what the end goal will look like.

“M&As often don’t go to plan and can fail to achieve the intended benefits. We have learnt over many years that there are several key things on which organisations should focus to increase the probability of success when establishing an integration program.

Decide the end state first

“Executives often think everyone is clear on what the target or end state of the merged businesses is, but their views are often misaligned, creating anguish for the team tasked with managing the integration,” Mr Careless said.

The starting point is – what is the end state for the integration?

Determining the end state clearly and unambiguously is vital. The integration team must:

  • purposely drill into contentious and challenging areas of the integration that could lead to disagreements, turf wars and misalignment
  • work through ways to resolve those
  • then get the end state agreed and signed off.

The team must determine who has sign off (design authority) for the design and the ultimate responsibility of ensuring the solution designs are fit for purpose.

That includes ensuring each design component of the integration program meets requirements and works effectively within the complex enterprise architecture of the new entity.

Having a design authority as part of governance helps ensure rigour in the process and prevents one executive making a decision that may have implications across other areas. Design authority ensures an impact analysis is conducted before a decision is approved.

Diverse views prompt misalignment

Misalignment occurs when executives have different views on the end state. For example, in an insurance company acquisition, here are four perspectives on the end state:


“That style of misalignment is common and, if it’s not managed and resolved at the outset, the integration program will flounder and every decision will be contested because there is no agreed end state,” Mr Careless said.

Resolution is assisted by third-party advisers, like Frazer Walker, that have no emotional attachment to brands or methodologies and can ensure a fact-based approach to achieving the optimal end state.

“Organisations often assume they have laid the groundwork because there is a business case for the purchase, but that’s an internal selling tool that emphasises the positives of the M&A,” Mr Careless said.

“There can be differing viewpoints, but consensus is needed before the integration program can move ahead. Some needs are mutually exclusive, so sort that out early in the process.”

Define the value proposition

The integration plan must start by clearly defining the value proposition and identifying what the end state looks like before developing the steps to get there. “You need to write it down and workshop it, get into the nitty gritty details of how you deal with brands, pricing and the myriad other elements involved in an insurance business,” Mr Careless said.

A business case can easily gloss over implementation challenges because it focuses on explaining the benefits of the acquisition without delving into the details of how integration will be achieved if the bid is successful. The acquiring firm is focused on what it’s buying, rather than the impact integration will have on its current business and organisational methodology.

“Integration is often considered a technical exercise, with a focus on systems and IT. But typically, that isn’t where the main challenges lie,” Mr Careless said.

A fundamental premise is to stay true to the reasons for pursuing the acquisition in the first place and to consider how the organisations’ cultures align.

Program governance framework

To ensure a smooth integration, get a solid program governance framework in place, with a clear understanding of how decisions will be made and the roles leaders from the acquired business will play in the governance framework.

Mr Careless advises acquirers to consider what the customer proposition will look like when they reach the end state and then consider what operating model is required to deliver that customer proposition.

“Some organisations assume the acquirer will just assimilate the acquired company, but that can destroy much of the value and purpose of the acquisition,” he said.

“Clarify the value proposition first, by examining what both organisations provide, including products and services, claims experience, brands, customer segments, price position, and markets, including geographic regions.

“Map them against each other. Where do they compete?” he said.

“Only when the value proposition is clear, can you develop the operational model. For example, a value proposition decision to retain the acquired brand in the market and visible via retail branches has a direct impact on the acquirer’s operating model.

“Again, examine both organisations. What does each do, where and how, who are their customers, what people fulfil various functions, what systems do they use?”

Principles establish communications methodologies

Mr Careless said a major challenge was deciding when to bring the acquired business’s executive team into the discussions. “They have much to offer in terms of understanding the capabilities of what has been acquired, but the acquirer will be nervous about open discussions on headcounts and reporting lines.

“It’s important to have clear principles on what happens to people affected by the inevitable restructure. Those principles will form the basis for internal and external communications and change management.”

Mr Careless said the discussions were frequently uncomfortable, because of emotional investment, but it was important to break down the “us and them” mentality and guide people through the process.

“Professionals understand a company doesn’t need duplicate CFOs, COOs, HROs and other senior roles. The implementation plan needs to identify how to create the best of both worlds and retain the crown jewels.”

Mr Careless advises organisations to split the integration into stages and map each stage across a timeline. What is essential to achieve in the initial months post-acquisition? When will the end state be reached?

“There are at least two steps on the journey. The ultimate end state, which delivers the full benefits outlined in the acquisition business case, and an interim state. After completion of the interim state, the third-party consultants can hand over to the new management structure that will be accountable, over perhaps several years, to deliver the final end state and benefits,” he said.

Mr Careless’s words of warning for insurance M&As are simple. Don’t be tempted to move quickly into executing the integration before there’s a clear picture of what the end target will look like.


Agree the target, develop the plan, then implement the plan to successfully integrate an acquisition. Product lines will vary, but the principles are the same across general and life insurers, brokers and underwriting agencies.


It can take several years to reach the target state. The initial program management with third-party assistance can achieve a specific interim target, with the new management structure then being accountable for the ongoing delivery to the target state.

Nick Careless is a Partner and co-owner of Frazer Walker. He has international experience in implementing transformational change across the insurance, wealth management and utilities sectors. Before establishing Frazer Walker, Nick consulted on industry deregulation in the US and the UK. He has held senior management positions at OSI (Sopra Steria), IAG and British Telecom. Nick’s specialties include business and IT strategic planning; and large-scale program and change management.