Case Study - Insurance Partner Distribution Negotiation

Client Situation

Our client had a long standing complex agreement for the distribution of financial services products through another ASX100 company. The key issues with the agreement included:

• This agreement/distribution channel represented a substantial portion of our clients turnover (hundreds of millions annual revenue)
• The terms of the agreement were heavily skewed to the benefit of our clients distribution partner
• The agreement placed unreasonable constraints on our clients ability to conducts its direct business
• On expiry of the contract the distribution partner initiated a tender process and expressed a preference to discontinue the current relationship

Approach

Pacific Strategy Partners worked with the client to structure the project into 3 work streams and a program office

1. Work stream 1 focused on addressing the immediate operational issues and relationship
2. Work stream 2 developed an alternative channel management structure to address relationship issues and to align with the preferred channel operating model
3. Work stream 3 initially developed a comprehensive negotiation factbase including an economic model of the 'as is' and 'preferred' channel structure. This work stream also prepared for initial negotiating meetings, including strategy, and developed the RFP response.

Impact

We initially addressed many of the issues that were constraining the current relationship. We then developed a new operating model and organisation structure that addressed all the material issues with the current relationship including an equitable distribution of profit and provided a growth story for both parties.

Our client was able to recover from being the least preferred tender respondent to successfully renew the agreement on significantly improved terms.

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