Exploring the impact of the extranet on IFA-insurer communication and relationships
A recent series of scandals hitting the UK financial industry has had a negative impact on consumer confidence in UK insurance companies. After assuming its powers and responsibility under the Financial Services and Market Act 2000, the Financial Services Authority (FSA) becomes the single statutory regulator directly responsible for the regulation of deposit taking, insurance and investment business. Strong legislation was introduced to maintain IFAs' independence, prohibiting insurance companies from exerting or persuading more IFAs to promote their products. Fighting to survive in an increasingly competitive market, several insurance companies have adopted the extranet to improve their communication and relationships with IFAs. Whilst channel relationship literature insists on the important role of communication in the supplier-distributor relationship, the emerging role of the extranet and how it reshapes IFA-insurer communication and relationships has hardly been explored. Accordingly, the research problem investigated in this thesis is: How has the extranet impacted on communication and relationships between the insurer and independent financial advisors (IE4s) in the UK? The research problem was investigated in two stages. In Stage 1, face-to-face interviews were carried out to help identify 5 research issues. RI 1: How does the extranet facilitate insurer-IFA communication? RI 2: How does the extranet impact on the use of other communication media? RI 3: How does the extranet facilitate the insurer-IFA relationship? RI 4: Impact of the extranet on communication, trust, commitment, cooperation, and conflict - How does this facilitate the quality of relationship between insurers and IFAs? RI 5: Does the perceived impact of the extranet on commitment have the strongest impact on the quality of the insurer-IFA relationship? in Stage2 , a mail survey of UK independent financial advisors was conducted to explore the research issues. In answering the research issues,this thesis' findings make the following contributions. Firstly, this research found that the extranet has a positive impact on insurer- IFA communication in general. However, it is still not conclusive that the extranet increases two-way communication between them. Secondly, this research found that it is highly likely that the extranet will decrease the use of certain modes of communication especially, the facsimile and the telephone. Thirdly, this research found that the extranet improves certain aspects of trust. In terms of commitment, although the extranet increases the IFAs' willingness to maintain their relationship with the insurer, it does not have a strong impact on the IFAs' commitment to the insurer. Concerning the co-operation construct, it is still inconclusive whether the communication enhanced by the extranet leads to better co-operation between the insurer and IFAs. Likewise, it is still not conclusive if the extranet-enhanced communication results in less conflict between the insurer and IFAs. Nevertheless, it is clear that the extranet does not intensify existing disagreements between them. Overall, the IFAs felt that the extranet-enhanced communication increased the quality of their relationship with the insurer. Next, this research found that the perceived impact of the extranet on relationship quality is positively related to the perceived impact of the extranet on trust, commitment, and co-operation and negatively related to the perceived impact of the extranet on conflict and, disagreement. Indeed, insurers need to be aware that to enhance the quality of their relationship with the IFA, they need to maintain and increase the IFAs' trust in, and commitment to them. At the same time, they should also try to facilitate co-operation and effectively solve conflicts between them and the IFAs. This research found that the extranet has the potential to help the insurer achieve these goals if it is implemented appropriately and effectively. Finally, the findings also suggest that commitment has the strongest effect on the perceived quality of relationship.