Distribution Channels in Life Insurance
DISTRIBUTION CHANNELS IN LIFE INSURANCE
Neha Singhvi & Prachi Bhatt MBA Students NIASoM, Pune
Distribution channel is the life blood of insurance business. Insurance distribution is strewn with opportunities and challenges .To make most of the opportunities in growing market like India we have to overcome challenges while encashing opportunities. Traditional distribution channel of agency still rules the roost in life insurance in India. Alternate distribution channels which came up after the opening up of the sector six years back have huge potential which needs to be tapped. The graph below is indicative of the influence of alternative channel in life insurance distribution. Figure 1: Comparison between Business done through agency and alternate distribution channel in life insurance industry in India in 2005-06
20 q Bimaquest - Vol. VIII Issue I, January 2008
Distribution Channels in Life Insurance
NEW BUSINESS (LIFE) UNDERWRITTEN THROUGH VARIOUS INTERMEDIARIES: 2005-06
Individidual Agents Private Sector LIC TOTAL Corporate Agents Banks Others Brokers Referral (Per cent) Direct Business
59.71 98.37 85.67
16.87 1.25 6.38
8.92 0.32 3.15
0.83 0.06 0.31
7.06 0.00 2.32
6.61 0.00 2.17
Source: IRDA Annual Report 2005-06 Why there is need for alternate distribution channels? l l l l l To increase insurance penetration in the country. To differentiate on basis of customer service. To retain and attract new customers so as to expand business To increase insurance awareness and knowledge among people. To satisfy the needs of more demanding customers. To improve cost efficiency in insurance distribution.
What determines choice of distribution channel for an insurance company? l l l l Where are the customers? What is target customer profile? Which product (linked, traditional, term etc.) can be sold through distribution channel? Which channel provides best buying experience and value to target customer segment?
The customer preferences vary by market segment like geography, age, income, life style etc, and market characteristics change over time.
Bimaquest - Vol. VIII Issue I, January 2008 q 21
Agents usually enjoy personal credibility with customers.
But. not fully updated with latest technologies
22 q Bimaquest . it can provide valuable feedback about the need and expectation of consumers. initial investment done on training and educating the agents goes waste. Agents provide various presales and post sales services to customers. Due to this. Agents are generally not tech savvy. personal contact and relationship can be established with the customer. agency was the only distribution channel for life insurance in India. Attrition causes the problem of servicing orphan policies.Vol. January 2008
.1999 Strengths l l l l Greater relationship and more face to face contact Consumers are used to the channel Experience and greater knowledge of industry Cross selling Ability l l l Weakness Higher cost for insurer and consumer because of higher commission rates Not as convenient as other channels Old fashioned channel. it has few drawbacks like high attrition rate. Even today almost 80% of business is carried through agency channel.Distribution Channels in Life Insurance
TIED AGENCY For decades. SWOT Analysis of Tied Agency Source: Paper on distribution channel by Datamonitor. This channel has various merits:l l l l l l Through agency. It involves no capital investment This channel’s awareness and acceptability is maximum among people Cross selling is possible through this channel Due to personal contact. VIII Issue I.
They serve well to motivate the agents to perform better. the number of agents working in life insurance industry is approximately 15Lacs but a majority of them are dormant which leads to poor activity ratio. Training becomes all the more important in today’s competitive environment where the agent is not only selling insurance but the company providing insurance. January 2008 q 23
. IRDA mandates companies to impart 100 hour training to its agents and today most of the companies have in-house training facility. Over manning also contributes to mis-selling and rebating Adequate concept. product and soft skill training is sine quo non for professionalizing agency force. leads to discontent within the profession and the respect for the profession is downgraded. Companies run loyalty and engagement programs (like club membership) and sales incentive programs (like short term contests) providing various monetary and nonmonetary benefits. Over manning has its cost to the company in terms of unrecovered or under recovered training cost. Agents are off-roll employees of an insurance company and keeping them motivated is a big challenge. increase interaction of agents with the companies.Distribution Channels in Life Insurance
Opportunity l l l Focus High net worth individuals who prefer relationship over price Integrate alternative channels into their strategy Embrace technology l
Threats Alternative distribution channels
At present. Also. promote spirit of healthy competition among the agents and to
Bimaquest . opportunity cost in terms of a more productive agent serving in place of a dormant agent can’t be looked over.Vol. Having some productive and lots of unproductive lot drags down the morale of the community of agents. It leads to poor knowledge about company’s whole basket of offerings and agents selling only a few products instead of doing a true need-based selling to customers. But number of agents attending subsequent product trainings at the time of product launches and other soft skill training sessions gets reduced substantially. The massive agency force is a pragmatic example of 80-20 rule. VIII Issue I. Adequate and quality initial training at the time of licensing is like laying a strong foundation for agents entering the industry and subsequent trainings are like sharpening the agents’ saw to stay competitive. The concern of the regulator towards growing proportion of linked products in companies’ total percentage of business can also be attributed to biasedness of training programs in favor of linked products. What is need of the hour is not the quantity but the quality.
INDEPENDENT AGENTS The presence of professional insurance brokers and independent financial advisors. Agents are facing razor sharp competition from other alternative distribution channels and with so many insurance players in the fray. Most of the companies have a dedicated agent’s portal but the number of agents accessing them is less than satisfactory. cooperative societies and panchayats
24 q Bimaquest . productivity and ethical values must be ingrained fully in the workforce. VIII Issue I. a dispute redressal mechanism for the agents should be established by the IRDA. provided these programs are easily comprehendible. One step forward in making the agents more efficient and professional is to make them more tech-savvy through training and other means.Vol. Insurance companies need to consciously endeavor into dedicated efforts for the image makeover of their agents which will go much beyond calling them advisors. Agents are the true Brand Ambassadors of the company and they deserve a fair treatment from the insurers. their job has become all the more difficult. Insurance selling is a tough job. The Corporate Agent is a concept introduced with a view to taking advantage of the presence of a large number of firms. is a major motivating factor for insurance to raise efficiency and to give better value to policyholders.Distribution Channels in Life Insurance
recognize good performing agents. January 2008
. Though the image of an agent has undergone lot of change since the time it was first introduced but still agents face a lot of sales resistance. financial service consultants instead of agents. This profession is also not left untouched by Information Technology. Inspite of multitude of other distribution channels coming up. the IRDA introduced a variety of intermediaries as “distribution” is key to insurance penetration. What is needed is a genuine effort in recruitment. knowing fully well that for a long-term business like insurance. who represents the interest of the client. corporations. banks. training and development of a good agency force critical for growth and survival. Looking at the regulatory front. transparent and quick in benefit disbursal and grievance redressal and adequate knowledge about the programs is given to agents. Also Sec 48A should be revised allowing agents to be represented in the Board of Directors of the insurers. NGOs. quality. CORPORATE AGENTS In order to spread awareness about insurance and to increase the coverage of a large section of population who have remained outside the radius of insurance coverage all these years. tied agency is here to stay.
The difference between CA and Bancassurance arrangement is that the former trains its own employees to sell the policies while in case of Bancassurance arrangement. Criteria to become a corporate agent: As the insurance contracts are highly technical in nature. In other words. January 2008 q 25
. Corporate Agents (CAs) are corporate entities (NBFCs) that source policies for the Insurance Company with whom they have a tie-up. VIII Issue I. The decision to engage any person as a Corporate Agent will be taken only in the corporate office of the Insurance company and proceedings appointing the ‘Person’ as Corporate Agent will be issued by an officer who will specially be designated by the Chief Executive Officer to issue such orders. The officer will also communicate to the IRDA the updated list of corporate agents engaged by the insurer on half yearly basis. One more condition is that license should be issued by a competent authority. In this communication. In case of corporate executives also. ITC. Potential corporate agents can be:l l Institutions having high customer base in rural regions – Micro Insurance – High customer base to be exploited in this segment. The officer so designated shall maintain a list of corporate agents appointed by the company and will be responsible for ensuring that the corporate agents comply with the regulations and the circulars and instructions issued by the authority from time to time. the employees of the insurance company (FSCs) source the business. the IRDA has prescribed certain qualifications to obtain a license. in order to become a corporate agent.Vol. the officer should specially highlight the cancellation of licenses. They are authorized to source policies for one insurance company only. eg. etc. if any and give brief reasons leading to the cancellation. NGOs
Bimaquest . the regulations issued by the IRDA stipulated that canvassing should be done only by “specified persons” engaged by the Corporate Agents and such specified persons should have the qualification prescribed by the authority. the corporate agency should have the people who posses qualification as prescribed by the IRDA and also the persons working for the particular agency should have a legal license which would enable them to act as solicitor or the procurer on behalf of the agency.Distribution Channels in Life Insurance
who are in contact with people in normal discharge of their activities and utilize their presence and services for canvassing the sale of insurance contracts.
Bringing relevance. 3. Bancassurance is not just selling insurance products to bank customer but exploits the true synergies and respective strength of bank and insurer. etc. Referral arrangement Referral is not permitted to banks acting as agents. Joint venture between bank and insurance company
26 q Bimaquest . motivation and skill development at the operating level at CAs branches. providing physical infrastructure and displaying of publicity material. Establishing credible service level agreements between the CA and the insurer. Resolving possible conflicts of interest between the CA and the insurer. Retailers
Implementing corporate agency: Key challenges in the Indian context l l l l l Creating an environment of top level involvement of NBFCs management. Enters into service level agreement 2.Vol. it is used for sharing bank database.
BANCASSURANCE Bancassurance channel was introduced in India when insurance industry was opened up for private players. Corporate agency Bank acts as corporate agent without risk participation. There are three types of models for bancassurance: 1.Distribution Channels in Life Insurance
Relatively new and untapped NBFCs like Religare. January 2008
. VIII Issue I. Setting up distribution procedures consistent with the manual systems in the CA.
Banks have good brand awareness within their geographical region which provides for a lower per lead cost.Distribution Channels in Life Insurance
l l l l l l
Benefits to Insurance Company l l l l Channel diversification Reduced acquisition cost Increase volume of business and improved geographical reach. a bank can tie up with one general insurance and one life insurance Company as mandated by regulation. Reduction in risk based capital requirement Optimum utilization of infrastructure and resources. So customers can be reached extensively. Bancassurance is a win-win situation for the insurance company and the bank Benefits to Bank Banks are key pillars in of financial system with considerable share in total financial assets of households in form of deposits l Banks have large network spread across the length and breath of the country. January 2008 q 27
.Vol. Total of about 65700 branches of commercial banks serving an average 15000 people. Benefit from substantial data base of bank
Bimaquest . VIII Issue I. meet expectations Leverage on their huge customer base. Source of revenue diversification for fee based income in scenario of tightening interest margins Opportunity to provide wider range of services to clients to increase retention.
Known customer therefore risk assessment is easier
Benefits for Consumers l l l l l l Greater convenience by meeting all financial needs under one roof.Vol.Distribution Channels in Life Insurance
By collaborating with bank can develop new financial product.
No No No
Full time Full time Full time
Single Single Multiple
Source: The Journal of III. January 2008
. Special Advisors Salaried agents Bank employees Set up/ acquisition of agencies or brokerage terms Direct response Internet E-Brokerage Complex Complex Simple Complex Salary Salary Incentives Owned Face. universal banking Reduced distribution cost will lead to reduced premiums. VIII Issue I.
28 q Bimaquest .5 Delivery Approaches of Bancassurance Delivery Aprroach Product Salary/ sold Commn Carreer Agents Complex Commn.Part/ Single/ to-face Full Time Multiple Insurer Yes Full/Part time Single Yes Yes Yes Yes Full time Full time Part time Full time Single Single Single Multiple
Simple Simple Simple
Owned Owned Commn. Double Assurance/credibility Convenience in payment Easy and automatic renewal
The products that are likely to sell through bancassurance are simple vanilla products. What banks need is to build and excel in multiple distribution channels to profitably meet the requirements of its varied clientele. Provide easy accessibility. July-Dec 2004 Bancassurance is many distribution channels in itself. Delivery Approaches of Bancassurance
Thailand etc. 5. Competitive clash between bank and insurer’s parent bank in core banking business resulting in bank holding bank sensitive customer information. Change in management of bank Lack of openness and trust between the bank and the insurer. VIII Issue I. South Korea. The mission and vision might also differ. These issues need to be addressed.The bank staff should be properly trained so that they can do proper need based selling to the customers. Proper training of Bank Staff.there should be a proper communication of the process and the benefits of the partnership to the front end/branch level people so that they feel part of the entire system. No jointly agreed business plan.MIS reporting should be simple and easy to understand and the flow of reports should be as per service agreements. The Indian organized retail segment pales in comparison even with other Asian countries such as China.
Bimaquest . 3.the two partners may have different organizational cultures and philosophies. MIS Reporting.
l l l l
POTENTIAL OF RETAIL CHANNEL IN LIFE INSURANCE Organized retail makes up for over 70 to 80 % of the total business in developed countries.Distribution Channels in Life Insurance
Bancassurance fallout is driven by various factors like: 1. Communication. Right Products and clearly defined roles and responsibilities. Business processes not integrated.Vol. 4.technological incompatibility between the insurer and the banker might lead to non-delivery of promised service standards.
Key Success Factors for Bancassurance l l Cultural Integration. January 2008 q 29
. Technological incompatibility.
Vol.Distribution Channels in Life Insurance
The Indian retail market is the most fragmented in the world. FORECAST ABOUT RETAIL SECTOR Figure 3: Forecast about retail sector
ESTIMATED GROWTH OF RETAIL SECTOR
300 250 In Billions 200 150 $ 100 50 0 FY05 FY08E
Retail sales Organized Retail sales
Source: Enam securities. according to CRISIL report. with just 2-3% of entire retail business carried out with organized sector.
ORGANISED RETAILERS' STORE LOCATIONS
Tier 2 c ities Met ro & Tier 1 c ities
Source: Economic Times Survey
30 q Bimaquest . VIII Issue I. January 2008
VIII Issue I. Brand identity.Vol. Retailer like Tesco. Premium Collection: Retailer collects premium on cash basis at in-store money market counters.
5. 4. Insurance brokers differ from agents who represent the insurance carrier
Bimaquest . Claim Administration: Client has to lodge claim directly through the insurer.Distribution Channels in Life Insurance
Organized retail will form 10% of total retailing by end of this decade. Sainbury and ASDA are among largest distributor of insurance product. Insurance product can be pushed through organized retail sector. Insurance company has to undergo restructuring to align itself with retail distribution channel. at present.
3. trust and understanding associated with retailers may make customers more receptive to being sold insurance through retail channel. organized retail channel is 3% of total retail business but with huge growth rate of retail sector it can become viable distribution channel for life insurance products. Retailer can act as corporate agent or as referral. January 2008 q 31
. 6. Allocation of distribution function between retailer and insurer 1. the organized sector will grow at rate of around 30% per annum. Although. 2. Marketing: Retailer markets policies through in-store money market counters Sales: Policies are available at money market counter in shop rite stores not actively sold. Policy Administration: All policies administration handled by the insurer. Claim Payments: Insurer is responsible for claim payments. UK experience shows retailer can become significant players in insurance distribution. BROKERS The broker acts as an intermediary between the companies and insurers and represents insurance buyer. In meantime.
(source: Genesis) This channel can be integrated to agency channel for better servicing and for establishing one-to-one relationship with customer.
Vol. The IRDA had set up an expert committee in July 06 to address brokers related issues. Major drawback in Indian insurance broking is low channel awareness and unevenly spread of broking activity. Majority of brokers are based in western zone (around 78) and northern zone ( around 79). Haryana. Internationally. Composite (direct and reinsurance) and Reinsurance. Building faith in mind of client and building personal credibility. Proximity of metros to few states. Madhya Pradesh.
Insurance brokers are demanding a cut in the minimum capital requirement for getting license and permission to have co-brokers and sub-brokers. Percentage of new business written by brokers in life insurance for the year 2005-06 is just 31% which is indicative of the minimal presence of this channel in life insurance distribution. There is no licensed broker representation hailing from states of Goa. has been receiving representation from Insurance Brokers Association of India(IBAI) but no
32 q Bimaquest . January 2008
. and travel and tourism. VIII Issue I. Reasons for this are as follows:l l l l l l Large amount of minimum paid up capital. because of virtual stagnation in the non-life sector prior to detariffing . insurance brokers focus on corporate and non-life insurance business. Jarkhand etc. Bihar. real estate. leaving the retail and life business to agents. This channel is new experience for the life insurance customer accustomed to brokers in other financial services.Distribution Channels in Life Insurance
and not the client. Lack of entrepreneurship of locals. Jammu and Kashmir.Brokers account for about 15 per cent of non-life premium at present. Uttranchal. However. There are three types of licensing for brokers-Direct (life and non-life and excluding reinsurance). brokers in India had to cater to both the retail and life business. Co-broker and sub-broker arrangement are not allowed. Inadequate availability of insurance potential.
Around 45% of life insurance and 85% of pension business is done by IFA in UK. VIII Issue I. They have experience in selling financial product. gave birth to Independent Financial Advisors (IFA). For example. IFA assembles different financial products in accordance to customer needs and provide value added product by creating customized financial product. accountants or other experts.K. Customer has faith and trust on financial advisor as new customer is introduced to advisor from existing customer.Vol. the direct sales force of life insurance constituted a major distribution channel in United Kingdom. which is not true. vacations. With the emergence of Polarization rules in U. selection between tied to one company or being independent to handle all products across the market. Most of us deem financial planning as either tax. the need for financial planning for proper management of personal finance. with growth of upper and upper middle class and with the increase in life expectancy of people. Financial planning integrates all aspect of our personal finance. In India. IFAs are qualified persons or institution who can provide advice on financial products. that is. buying home. debt management etc. Expert knowledge will lead to need-based selling and a pull strategy rather than a push strategy in selling insurance products. Today. In India. January 2008 q 33
. FINANCIAL PLANNER AND ADVISOR Before 1990s. insurance or investment planning. children marriage and education. benefits of selling insurance product through financial planner are as follows: l l l Complex product can be sold through this channel.
Bimaquest . IFA matches product with customer needs. IFA show their significant presence as distribution channel.Distribution Channels in Life Insurance
aspect of Life insurance was touched upon by this expert committee report. number of financial advisors and planners are growing. Therefore lapsation ratio would be minimum in this channel.
High persistency. Banks and financial institutions have been successfully marketing credit cards and other financial products using this channel. product customization and efficient post sales servicing. The advantages of worksite marketing:l l l l l l Captive customer base Potential to sell individual insurance and group insurance Potential to sell individual insurance and group insurance High hit ratio for intermediaries Usually employees perceive this as a facility provided to them by the employer for their welfare and this creates goodwill. One possible reason for insufficient development of this channel in India is that employers generally expect some kind of incentive to provide the facilities to the life insurers for making presentations and making arrangements for deduction of premium from salaries. Technology has a key role to play in worksite marketing to ensure cost benefits. as in any country one of the biggest markets is through the worksite. January 2008
. This area needs to be tapped.
34 q Bimaquest . payroll-deduction basis. If not an identical model. Under a worksite marketing arrangement.Vol. a similar approach can be used for selling insurance. VIII Issue I. the insurer’s sales representative then markets the products directly to the employees at the worksite.Distribution Channels in Life Insurance
Worksite marketing is the process of distributing individual or group insurance products to people at their place of work on a voluntary. an insurer approaches an employer about offering its employees the opportunity to buy insurance coverage at work. employees and life insurer. The challenges would be the cost effectiveness. The employer implements a payroll deduction plan to withhold employees’ premium payments from their paychecks and then submits the premium payments to the insurance company. which would determine continued business.
This channel of distribution is beneficial to employer. group products or work-site products do have a definite market that cannot be ignored. With changes in human resources management polices and compensation packages. If the employer agrees to the offering.
national. Policy needs to be fairly standardized more specialized and less costly considering nature of channel. thousands of consumers visit the kanetix website to compare insurance quotes from a variety of Canadian insurance companies. submit reports and exchange relevant information. Consumer must have asses to all information relating to product or service. Each day. There are about 124 million rural
Bimaquest . kanetix is the leading provider of online insurance quotation technology and develops online quotation systems and websites for some of Canada’s leading insurance providers. In India. Website of insurance company has to include various other services. The pay-per-use software is available through monthly / quarterly user-based subscription.Vol. DISTRIBUTION CHANNEL FOR MICRO INSURANCE Rural sector is a huge untapped market for insurance. It features 3 ‘trading windows’ . VIII Issue I. But internet is ill suited at providing the level or type of insurance and support that most consumers are seeking with purchase of insurance only 12% of companies sells insurance online. In addition to the insurance marketplace. we have PREMIA IBX enables insurance brokers. but portal for brokers are not developed. it promises instant comparative analysis of quotes. major factors considered are scalability and user adaptability Internet can provide online insurance market place. online insurance marketplace. If contract concluded through internet has to be free and fair. Users can select the insurance quote of their choice and choose to complete the application for coverage online or purchase their policy over the phone. While deciding to implement a new technology. It is backed by 24hour servicing by 3i InfoTech. For example. unlimited exposure to all types of clientele across India and huge savings in software procurement and maintenance. In India internet penetration is still low legality of agreements are posing difficult problem. An additional IBAI window allows brokers to communicate with IBAI.one each for insurance brokers. kanetix is Canada’s.Distribution Channels in Life Insurance
INTERNET Insurance company are already using internet for direct marketing and providing service to their client. companies and customers to interact in real time with one another on the same software interface through the web. While it provides individual web sites for each broker. The kanetix insurance information and shopping service brings consumers and insurance companies together in a one-stop shopping environment. January 2008 q 35
. customers and companies. Launched in October 1999.
. policy query handling. relationship building and management. business acquisition.
36 q Bimaquest . Role: awareness programs. policy servicing and business retention through premium collection activity. This arrangement helps in keeping the cost of insurance low which is attractive for the poor and profitable for company. complaint handling. MFIs. VIII Issue I. Site mode of operation: moves from village to village. There is an enormous demand for social protection among India’s poor. It can also provide service to other channels for policy servicing. video audio facility. Insurance company underwrites the risk and these civil service organizations handle distribution as the former has economies of scale and later has good grassroots network. Post Offices E-Bima Internet kiosks Mobile Vans
l l l l l l
Infrastructure: a van. Possible distribution channels for micro insurance distribution: l NGOs. assistance in claim handling etc. Regulator has reduced the training requirement to 25 hours. Human resource: one driver and two to three sales cum administrative staff agent. MFIs. SHG: According to IRDA regulations a new class of agents NGOs. It has been accepted that micro-insurance is a key service in the financial needs package of people at bottom of the pyramid. SHG of repute can now be used as micro insurance agents. a simuter with a printer.Vol. Cooperative Banks and RRBs: There is a large network of cooperative banks and regional rural banks which can be used as a distribution channel.Distribution Channels in Life Insurance
households. Micro agent: Insurance company can also appoint various micro agents.
VIII Issue I. Trust and reliability Understanding of insurance Business acquisition capability Support requirement Financial transaction handling Operational discipline Customer servicing
Bimaquest . of farmers in rural area
Farmer of any village
Channel’s effectiveness can be evaluated on the following criterion: l l l l l l l l Reach Influence on target segment.000 members spread over 20-25 villages 5 to 7 villages 7500 accounts
5000+ pop size village 5000+ pop size village 2000+ pop size village 5000+ pop size village
*ITC E choupal District cooperative bank Kissan Credit Card Source: FORTE study
Prosperous village Block head quarter
12% of total no.Vol. January 2008 q 37
.Distribution Channels in Life Insurance
Coverage through various institutions in rural areas:Name of the institution/ instrument Accessibility/ coverage of each branch Rural presence/ penetration
Regional Rural Bank Commercial bank (Rural Branch) Post office Cooperative society
15-20 villages 5000 account holders spread over (35-40 villages) 5-6 villages 10.
perhaps. Product literature. They need to have comprehensive knowledge about the life cycle stages of an individual. Awareness creation about insurance is important for success of rural insurance. Mis-selling is very common in insurance industry. It can be done through awareness campaigns and workshops for sewaks. They are more target oriented than customer oriented. VIII Issue I. wall painting. Simplicity necessary to increase not only customer comfort level but also of field advisors. Unintentionally or intentionally in some cases the channel members are forced to sell products that are best suited and beneficial to channel rather than the proposer. Glitch in claim settlement often gives negative publicity and very often turns the entire village and surrounding villages against insurance. Rural should be adequately informed death claims procedure. Insurance knowledge is complex. Micro insurance success depends if all stakeholders take part in awareness building.Vol. This investment has to be recovered. to earn a much higher commission rate. television. CHALLENGES FOR DISTRIBUTION CHANNELS l l Investment has to be made on education. teachers. gram pradhans having considerable influence can be used as agents. Sometimes agents or advisors
38 q Bimaquest . panchayat members. How efficiently channel is able to perform the role of the primary underwriter is a big question mark. Customized product should be designed to meet rural people’s localized issues and problems. Channel member should be in a position to advise the prospect as to what is the best choice for him in the given circumstance. Sarpanchs. radio. efficient delivery mechanism and product development. patwaris. It is responsibility of distribution channel to develop expertise and to provide customer with insurance knowledge. Micro insurance’s success will depend on achieving a critical mass. street plays and folk songs. Literates can be reached through pamphlets. Illiterates can be reached through gram sabhas. and hoardings. This occurs when. People in rural area buy insurance acting heavily on faith.Distribution Channels in Life Insurance
There is insufficient data on consumption and saving pattern of rural India which proves an impediment in insurance needs. For example agents do not assess the needs of the customer properly while recommending products. proposal forms and policy contracts should be provided in vernacular language. training and establishment of a distribution channel. posters. January 2008
opportunities and challenges. -A wholesome profession . The institutional agents might not keep follow up. -Bancassurance – Not Quite a Done Deal Corrine Legrand.A Microinsurance Compendium.New trends in world Bancassurance.India Insurance Report Graig Churchill. As a result. . Insurance companies have to align itself according to different channels.CGAP working group on micro insurance. . Dharmendra Kumar and Rahul Singh.C. 2006 H.Distribution Channels in Life Insurance
misrepresent facts by promising unrealistic returns to customers. but the fine is just Rs 500. 2006 James Roth and Vijay Athere. Good and bad practices.Protecting the Poor. or even provide incorrect information on product features.Sigma .Channeling the future Kaori Zeniya.
REFERENCES l l l l l l l l l l l K. VIII Issue I. the customer is unhappy and saddled with a product that does not meet either his immediate or future needs. -Dynamism in reform in financial product distribution channels in United Kingdom Mr. . Douglas Summer. Rebating has been an unfortunate practice in every variety of financial products in India.Chaturvedi.Game Is Changing Insurance Reloaded. It is illegal to share the commission with the clients. No 5/ 2007 IRDA Annual Report 2005-06
Bimaquest . The average lapse ratio for the insurance industry is about 25% which is an indicator of mis-selling. . Case studies no 14 Vijay Chavan. . IRDA Journal Jan 2005 Bancassurance:Emerging trends. . January 2008 q 39
. Mishra and Smita Mishra.Vol. it costs about five times more to attract a new customer than to retain an existing one. According to a study. l Channel may focus more on acquisition rather than retention. 2004 K Nitya Kalyani.
-“Bancassurance. -“ Changing scenario of distribution channel” N Joshi. –“Bancassurance in Indian environment” Joy deep K Roy.swissr. New Delhi. VIII Issue I.Vol.-“ Emerging Communication Platforms in Rural India”
l l l l l l l
WEBSITES www.irdaindia. R V Ranjan.“Bancassurance in Insurance Distribution: Key Issues in the Indian context”. 19th Oct. -“Rural insurance scenario–a research based presentation”.a suitable Model for India” Rajender P Chitale.org www. FICCI Sixth International Conference on Insurance. FICCI Seminar. FIICI 9th conference on insurance.ibai.org www. 2004.milliman. Graham Moris..“Distribution Pluralism”. –“Custom Built Partnership”.iii.com www.com www. 2001 V Vishwanand.Distribution Channels in Life Insurance
The Journal of III July – Dec 2004
PPT/PRESENTATIONS l R.Krishnamurthy. January 2008
.iis. Stuart Purdy. October 15. .org www.org
40 q Bimaquest .