INSURANCE DISTRIBUTION
SYSTEM
By
Deepa
CHALLENGES FACED BY THESE INSURANCE COMPANIES
• Designing of products suiting the market.
• Using the right distribution channel to reach the customer
INSURANCE IS SOLD …
NOT BOUGHT
DISTRIBUTORS ?
It is the distributor who makes the difference in terms of
the quality of advice for choice of product, servicing of
policy post sale and settlement of claims.
The distributors have to become trusted financial
advisors for the clients and trusted business associates
for the insurance companies.
CHANNELS IN THE DEVELOPED
MARKETS
Personal distribution systems
agenciesof different models and brokerages,
bancassurance, and work site marketing.
Direct response distribution systems
Client purchases the insurance directly.
Internet, telemarketing, direct mail, call
centers, etc.,
CHALLENGES !!!!
Insurer Distributor
Building faith Intermediaries being
about the able to build personal
company in the credibility with the
mind of the clients
client
TRADITION DISTRIBUTION
Agents
DRAWBACKS OF THE TRADITIONAL
APPROACH
They may not have been sufficiently knowledgeable
about the different products offered.
May not have sold the best possible product
to the client.
The customer trusted the agent and company.
This arrangement worked adequately in the absence of
competition.
PRIVATE VS PUBLIC
Identity is well Have to build their
established, but the identity in a market
perception of " poor where the public does not
service providers" is a distinguish them.
stigma. Remove the perception
that anything that looks
Products are not attractive good is expensive.
and flexible enough but
expensive.
DISTRIBUTION CHANNELS
Agents
Formal Banks
Regional Rural Banks
Cooperative Banks
SHGs & their Federations
NGOs & MFIs
Post Offices
Internet & Rural Kiosks & Rural Knowledge Centers
AGENTS
Insurance sales agents,
help clients choose
insurance policies that suit
their needs.
Captive agents work for
an insurance company,
and only sell that
company's products.
Educating and training
these agents is a serious
challenge for the
insurance company.
BANKS - BANCASSURANCE MODEL
The process through which
insurance products are sold
to customers at their local
banks.
Banking network of 65,000
branches serving more than
300 million retail banking
customers, insurance can
be available at affordable
prices to people even in
remote corners of the
country.
ADVANTAGES
High credibility (as trustworthy are takers of
money) with the public.
A ready customer base.
Low cost channel for selling simple vanilla
products.
Extensive reach including the rural pockets.
DISADVANTAGES
Economic viability for the banks to take up as
bancassurance is a volume business.
Training of people and lack of vision and awareness
Useful for selling only certain lines of products
Initial investment in systems and processes and people in
training
BROKERS
Insurance Broker is a person having specialized knowledge
in the field of finance who play the important intermediary
role between the customer and the insurance company.
Brokers represent the customer and will sell the products of
more than one company.
They seek to determine the best fit for the client and can
effectively address the mind block faced by the public about
the various companies.
This is applicable in the case of life insurance for the high-end
and corporate/group segment.
WORK-SITE MARKETING
Human resources management polices and compensation
packages.
Group products or work site products do have a definite
market that cannot be ignored.
Advantages
Captive customer base
Potential to sell individual insurance and group insurance
High trust factor
High hit ratio for the intermediaries
INTERNET
Urban Vs Rural.
Online banking, still a small fragment.
Insecurity associated with transactions over the net.
In the Indian market, where insurance is sold after
Considerable persuasion even after face-to-face selling, the
selling over the net, which must be initiated by the client,
would take some more time.
Improvements in bandwidth and infrastructure are needed.
INVISIBLE INSURER
In this model, the insurance company or its representative is
not the entity marketing the products.
Suitable Product - Group creditor insurance
The insurance cover is sold by an automobile /credit card
company as an add-on product leveraging the brand of the
retailer.
ADVANTAGES & DISADVANTAGES
Advantages
Arrangements attractive
Low distribution cost
Captive customer base
Disadvantages
Repeat business or renewal of business cannot be
assured.
CONCLUSION
Success of marketing insurance depends
Understanding the social and cultural needs of the target
population.
Matching the market segment with the suitable intermediary
segment.
Intermediaries need to be empowered with the right learning,
training and sales tools and technology enablers.
Insuring your family is as easy as loving them.
THANK YOU …..