Unit -5

Insurance Agent
&
Marketing Ethics

Ms. Immaculate Mary

School of Business-SJU
Topics to be covered
● Agent, agent compensation & commission, ethics in marketing
insurance product, channels of insurance;
● Role of insurance agent;
● Third-party administrator, insure tech, and bank assurance.
Understanding the Insurance Agent's Role

Role of an Insurance Agent Types of Insurance Agents

An insurance agent is a licensed Captive Agents work exclusively for

professional who sells and services one insurance company, selling only
insurance policies on behalf of one or that company's policies.
more insurance companies. They play a
Independent agents represent
crucial role in helping clients
multiple companies, offering a variety
understand their insurance needs.
of policy options to their clients.
Captive Agents vs. Independent Agents

Captive Agents Independent Agents

Strong support from the insurance Access to a variety of policy options
company and consistent product and the ability to tailor solutions to
training. However, they are limited client needs, but they receive less
support from individual insurance
to selling only one company's
companies.
policies.
Forms of Agent Compensation
● Commission-Based: Percentage of the premium from sold
policies.
● Salary-Based: Base salary combined with commissions,
common for captive agents.
● Bonuses and Incentives: Earned for meeting sales targets or
selling specific policy types.
● Renewal Commissions: Commissions on policy renewals to
encourage long-term client relationships.
Commission-Based
Compensation
● Percentage of Premium:
Agents earn a commission
based on a percentage of the
insurance premium.
● Example Calculation: If an
agent sells a policy with a
$1,000 premium and earns a
10% commission, they receive
$100.
Salary-Based Compensation
● Base Salary: Regular income regardless of sales
performance.
● Combined with Commissions: Additional
earnings based on sales, providing financial stability
and incentives.
Bonuses and Incentives

● Sales Targets: Bonuses for achieving

specific sales goals.
● Policy Types: Incentives for selling certain
types of policies, such as life insurance or
annuities.
Renewal Commissions
● Long-Term Relationships: Encourage agents to
maintain ongoing client relationships.
● Consistent Income: Provide a steady stream of
income from policy renewals.
Commission Structure in Insurance

Percentage of total
40-100% 15-20% 10-15%
contract value

Commission for Commission for Commission for Commission for

Life Insurance on Health Insurance Property and Annuities and
Investment
the first-year on the first-year Casualty on the
Products
premium premium premium
Life Insurance Commissions

40-100% 2-5% $500

Range of first-year Range of renewal Example calculation for

commissions based first-year commission
commissions
on a $1,000 premium at
based on the on the renewal
50%.
premium.
first-year
premium.
 15-20%

Range of first-year commissions based

on the first-year premium.

Health Insurance
-

Renewal commissions are described

Commissions as a smaller percentage.

$180

Example calculation for first-year

commission on a $1,000 premium at 18%.
Property and Casualty Insurance Commissions

10-15% $120
-

Range of first-year Renewal commissions Example calculation for

commissions based are described as a first-year commission
smaller percentage. on a $1,000 premium at
on the premium.
12%.
Factors Influencing
Agent Commissions
● Type of Insurance Product: Different
products offer varying commission
rates.
● Policy Length: Longer-term policies
often yield higher commissions.
● New vs. Renewal Business: New
business typically offers higher
commissions than renewals.
● Agency vs. Direct Sales: Working in
large agencies may involve
commission sharing.
Role of Agent as per Insurance Regulatory and
Development Authority of India(IRDA)

Pre-licensing Training On-the-job-trai

Examination ning
training contents

● Eligibility ● Insurance
products ● IRDA licensing ● Workshops
● Training Seminars
IRDA regulations exam- ●
duration ●
Refresher
● Ethics and Insurance ●
● life-/general-5 courses
responsibilities Institute of
0hrs Sales and ● Updates on new
● India.
● Both marketing policies and
together-75 ● Policy holder regulations.
hrs protection

Renewal and continuing education: Validity of 3 years.

Ethical considerations
✓ Transparency
✓ Truthfulness in advertising
✓ Suitability of products
✓ Informed consent
✓ Non-discriminating practices
✓ Avoiding high-pressure sales tactics
Ethical marketing in insurance

Best practices Consequences of Unethical

Marketing
● Honest representation ● Loss of trust
● Training and ethical ● Legal and regulatory
standards penalties
● Avoiding conflict of interest ● Reputational risk
● Full disclosure ● Client disputes
● Regular communication
Insurance channels refer to how insurance companies distribute their products
and reach customers.

Agency Direct channels

Brokers Bancassurance
channels (DTC)

Digital Group Corporate Affiliated

platforms insurance agents partnerships
 Third-Party Administrators (TPAs)-
● an organization that processes insurance claims or provides
administrative services on behalf of an insurance company.

Claim Customer Network Policy Regulatory

Cost control
processing service management administration compliance

Eg: Medi Assist, Paramount Health Services & Insurance TPA Pvt. Ltd, etc.
Insurtech
● The use of innovative technology to streamline and transform the insurance
industry. Insurtech companies develop digital solutions and tools to enhance
customer experiences, improve efficiency, and reduce costs in policy
management, underwriting, claims processing, and customer service.

Artificial Big data & Mobile

Internet of things
Intelligence & predictive applications, Cloud computing
(IoT)
Machine learning analysis digital platforms

Lemonade- renters/homeowners
Root Insurance- vehicles-car insurance using telematics
Policy Bazaar- aggregator-comparing policies
Bancassurance
● Partnership between a bank and an insurance company, where the bank
sells the insurer's products through its network.
● Wide reach and convenience
● Cost efficiency
● Product Variety
● Enhanced customer experience

India: SBI life insurance, ICICI Prudential life insurance, HDFC life insurance.
Global: Allianz, HSBC