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General Insurance Industry in India-The Distribution Channels at Play

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 Bitcoin Volatility vis-a-vis Gold and Dollar

Print ISSN 0972 - 8031

Volume XV, No. 1, January-June, 2017
Online ISSN 0974-1852

LBS Journal of
Management & Research

CONTENTS
Research Papers

Does Fund Managers’ Ability Vary with Mutual Chetna Vashisht, Mohit
Fund Rating in India? Gupta and Navdeep
Aggarwal

Customer Attitudes and Adoption of Digital Prabhanshu Tripathi

Banking and Puneet Rai

Performance of Priority Sector Lending in India: Sanjay Tiwari

A Critical Review

Factors Affecting Customers’ Accommodation Udit Chawla and

Satisfaction and Service Quality in the Hotel Kalyan S. Sengupta
Industry of Rural West Bengal

Consumer Review Analysis Using Topic Subhasis Dasgupta and

Modelling Kalyan Sengupta

Bitcoin Volatility vis-a-vis Gold and Dollar Shalini Agnihotri and

Vipul Goyal

General Insurance Industry in India – The Asif Ali Syed and

LAL BAHADUR Distribution Channels at Play Dipankar Acharya
INSTITUTE
SHASTRI OF
Book Review
MANAGEMENT DELH
Exclusion Deprivation and Nothingness G.L. Sharma
I of Management and Research
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Vol. XV, No. 1, January-June, 2017, pp- 65-72 •† ‹ ƒ • ‘ —” •ƒ Ž • Ǥ…‘ • A product of Diva Enterprises Pvt. Ltd.

DOI: 10.5958/0974-1852.2017.00007.4

General Insurance Industry in India – The Distribution Channels at

Play
Asif Ali Syed1 and Dipankar Acharya2*
1Assistant Professor, Department of Business Administration, FMSR, AMU, Aligarh, Uttar Pradesh, India
2Country Head (Affinity & Strategic Relationships), Royal Sundaram General Insurance Company Limited, Chennai, Tamil
Nadu, India
*Corresponding author email id: acharyadipankar@yahoo.co.in

ABSTRACT
This article is a general review which surveys the distribution channels in the Indian non-life insurance industry and the
trends that are visible after the liberalisation of the insurance industry with the entry of the private sector. Some new
channels introduced in the recent past to improve the insurance penetration and help in the further spread and availability
of insurance. The usefulness of each of the channels listed and the customer groups they are catering to have also been
specified. The purpose of this study is to introduce the new incumbents to this space to the various alternatives available
which is already known to the practitioner. We have also tried to map the progress of the distribution channel network
and the trend it is displaying at present and the challenges likely to be faced by the insurance companies in future.
Keywords: Channel, Distribution, General, Industry, Insurance

DISTRIBUTION CHANNELS IN THE NON-LIFE Indian market has progressed and evolved dramatically.
INSURANCE INDUSTRY TODAY IN INDIA The non-life (general) insurance market has grown at 13
per cent on a year-on-year basis in the last financial year
Insurance has to be sold world over, and the Asian market
closing at INR 660 billion of gross written premium
is no exception. The ‘touch point’ with the ultimate
(GWP) on 31 March 2016. Before 2001, in the
customer is the intermediary. In this study, intermediaries
preprivatisation phase of the insurance industry, there
refer to marketing intermediaries engaged in distribution
were mainly two channels of distribution – agency and
of insurance products. The role played by them in the
the direct channel (salaried sales force). The agency
insurance markets is critical. The intermediary makes the
channel accounted for 70 per cent of the sales in the
difference in terms of the quality of advice regarding
general insurance industry. Today, there are many distinct
choice of product, servicing of policy after sale and
channels with direct sales contributing to only a very
settlement of claims. In the Asian markets, with their
nominal share. The composition of the direct sales
distinct cultural and social ethos, these conditions play a
channel has also been propped up by sales through the
major role in shaping the distribution channels and their
Internet, telecalling and other modes apart from the
effectiveness. The intermediaries have to become trusted
salaried sales force. So, the direct sales channel of today
financial advisors for the clients and reliable business
is no longer what it used to be before the year 2001. In the
associates for the insurance companies. Hence, there is a
year 1999, before privatisation, there were only four non-
need to leverage multiple distribution channels in a
life insurance companies, and today, there are 28 non-life
costeffective manner which is also amenable to the
insurance companies.
ultimate customer. So, distribution remains the most
critical element in the insurance value chain.

2
 General Insurance Industry in India – The Distribution Channels at Play
There are the following stakeholders in the insurance
buying and selling process. First and foremost, we have
the purchaser of insurance also called the insured or the
customer/client. Then there is the insurance company also
called the insurer. Then there are various types of
intermediaries who make the insurance product available
to the insured from the insurer (also called the
underwriter). An attempt has been made here to study the
various intermediaries (also called channels of
distribution) which are available today to the customer of
an insurance product in India.
The purpose of this paper is to survey the intermediaries
presently available in India in this sector and how the
insured can take advantage of these intermediaries for
purchase of non-life insurance policies in India. An
insurance intermediary means individual agents,
corporate agents including banks and brokers – they
intermediate between the customer and the insurance
company. Insurance intermediary also includes surveyors
and thirdparty administrators, but these intermediaries are
not involved in procurement of business. Surveyors
assess losses on behalf of the insurance companies. Third-
party administrators provide services related to health
insurance for insurance companies.
The non-life (general) insurance products could broadly
be classified into the following groups:
 Motor insurance – which comprises insurance of all
moving vehicles and would constitute about 48 per
cent of the total general insurance industry’s GWP,
growing at 14 per cent on a year-on-year basis. This
forms the major chunk of the non-life (general)
insurance business in India.
 Accident and health group of products would on the
one hand include all types of health and
personalaccident policies and on the other various
retail products such as travel insurance, home
insurance, loan-shield insurance and various other
covers which have come up in the recent years. This
is a growing segment and would easily contribute to
31 per cent of the total industry GWP. This segment
is growing at 22 per cent on a year-on-year basis.
 Commercial insurance would be consisting of the
balance, which is basically the insurance for
corporate. This would mainly be property, liability,
transit and casualty insurance of such businesses.
LBS Journal of Management and Research
The following are the intermediaries presently engaged in
the distribution of general insurance products.
Intermediaries play a very important role of matchmaking
or ‘market making’ through which buyers are matched
with insurers in a complex multidimensional process. The
role of the intermediary is to scan the market, match the
buyers and insurers who would have the skill, capacity,
risk appetite and financial strength to underwrite the risk
Affinity Worksite
Groups Marketing
Corporate Agents
Bancassurance Tele
Marketing
Aggregators
Possible Distribution
Channels Available to a Direct
Individual
agency General Insurance Marketing
Company
Net
Referrals
Brokers Marketing
Franchisees
Shops / Malls / Post offices
Kiosks
Others are Insurance Marketing Firms, Point of sale.
and then help their client select from competing offers.
Price is only one of the several criteria that buyers
consider in deciding upon the insurer. Other important
factors are the breadth of coverage offered by competing
insurers, accessibility and availability of covers within
reach, arrangement of the distributor with the insurance
company, the risk-management services provided,
insurers and the concerned intermediaries’ reputation of
claims settlement and ability to get decisions in favour of
his customer. The financial strength of the intermediary is
also an important factor. Without the intermediaries, there
would have only been the direct channel, where the
customers would walk up to the insurance company
branch and purchase an insurance policy. It is not difficult
to imagine that if this was the only channel, how stunted
the growth of this sector would have been.
A survey of the various intermediaries distributing nonlife
insurance products today is as follows:
Insurance agents
An agent is a person who is licenced by the authority to
solicit and procure insurance business including business
3
 Asif Ali Syed and Dipankar Acharya
relating to continuance, renewal or revival of policies of
insurance. An agent could be an individual agent or a
corporate agent. An individual agent, as the name
suggests is an individual who as an intermediary
represents an insurance company, whereas a corporate
agent is an intermediary other than an individual,
representing an insurance company.
Insurance agents are, in general, licenced to conduct
business on behalf of insurance companies. Agents
represent the insurer in the insurance process and usually
operate under the terms of an agency agreement with the
insurer. The insurer–agent relationship can take a number
of different forms. In some markets, agents are
‘independent’ and work with more than one insurance
company (usually a small number of companies). In other
markets, agents operate exclusively – either representing
a single insurance company in one geographic area or
selling a single line of business for each of the several
companies. Agents can operate in many different forms –
independent, exclusive, insurer-employed and
selfemployed. In India, agents can have licence with only
one non-life insurance company as per Insurance
Regulatory and Development Authority of India (IRDAI)
regulations. A composite insurance agent means an
insurance agent who holds a licence to act as an insurance
agent for a life insurer and a general insurer. The
insurance laws amendment act of 2015 permitted
appointment of insurance agents to insurers and IRDAI to
regulate their eligibility, qualifications and other aspects.
IRDAI has the authority to regulate key aspects of
insurance companies operations in areas such as
solvency, investments, expenses and commissions and to
formulate regulation for the payment of commissions and
control of management expenses. Apart from individual
agents, we also have ‘corporate agency’. Apart from this,
we have micro-insurance agents whose guidelines are
much liberal as they deal with insurance of rural farmers,
daily wage earners and labourers. So this group is
engaged in distribution of micro-insurance products
designed to cover the risks associated with the low-
income group.
Insurance brokers
An insurance broker means a person licenced by IRDAI
who arranges insurance contracts with insurance
companies on behalf of his clients. An insurance broker
may represent more than one insurance company,
4 Vol. XV, No. 1, January-June, 2017
whereas an agent represents only one insurance company
(one general, one life or both if he is a composite agent,
apart from a health insurance company).
Insurance brokers have been introduced into the Indian
market by IRDAI as professionals who represent and
service the interests of insurance buyers. Insurance
brokers typically work for the policyholder in the
insurance process and act independently in relation to
insurers. Brokers assist clients in the choice of their
insurance by presenting them with alternatives in terms of
insurers and products. Acting as ‘agent’ for the buyer,
brokers usually work with multiple companies to place
coverage for their clients. Brokers obtain quotes from
various insurers and guide clients in determining the
adequate policy from a range of products. In some
markets, there are distinctions among brokers depending
upon the types of insurance they are authorised (licenced)
to sell – all lines of insurance, that is property and casualty
or life/health coverage. There are distinctions between
‘retail brokers’, who negotiate insurance contracts
directly with consumers, and ‘wholesale brokers’, who
negotiate insurance contracts with retail brokers and
agents, but not directly with consumers. Reinsurance
brokers solicit, negotiate and sell reinsurance business
and intermediate between the insurer and the reinsurer.
This unique concept makes the insurance process more
efficient for both the policyholder and the insurer. Though
the broker represents the client, the brokerage or
commission of the broker is paid by the insurer. In India,
direct brokers need to take a licence from IRDAI after
fulfilling all the requirements as per the regulator. Once
they get a licence, they can sell all insurance product
lines. As per regulations, there are only direct brokers and
reinsurance brokers, who are engaged in arranging
reinsurance for risks of insurance companies.
In 2013, IRDAI permitted banks to become licenced
insurance brokers, enabling banks to sell insurance
products from multiple insurance companies. To allow
banks to act as insurance brokers and establish their own
subsidiaries, the Reserve Bank of India issued guidelines
for banks in January 2015. Some of the key guidelines in
this regard are as follows: banks can enter as an insurance
agency or through a broking business department. Banks
can act as corporate agents and are required to follow
guidelines issued by IRDAI. Risk management is one of
the most important factors for which brokers are sought
after. Brokers’ advice on the scope of the insurance
 General Insurance Industry in India – The Distribution Channels at Play

policies and how risks could be minimised. Sometimes Bancassurance and affinity marketing
the corporates may take a call to bear some of the risks
This refers to sale of insurance through groups such as
themselves instead of approaching an insurance
business, professional associations or banks. This is an
company. In the event of claims, the broker’s expertise is
arrangement in which a bank or professional association
required in determining whether it is covered under the
and an insurance company form a partnership so that the
policy, and if so, the appropriate quantum is payable. The
insurance company can sell its products to the former’s
broker then assists the insured through his expertise to the
client base. This way, the organisation earns additional
insurer to have the claim settled. Brokers also help to find
revenue by selling the insurance products, whereas
out the most suitable insurer. So, the broker’s position
insurance companies are able to expand their customer
remains intact despite telemarketing, e-commerce and
base without having to expand their sales force or pay
direct selling by the insurers. So the broker still continues
commissions to insurance agents and brokers, and this
to perform a very fundamental and unique function in the
way, the channel turns out to be profitable for both the
distribution process for some products and is yet to be
parties. These affinity groups and banks/Non-Banking
replaced by any of the other newly developed channels.
Financial Company usually become a corporate agent of
So, the insurance intermediaries, particularly brokers, the insurance company. As per IRDAI guidelines in
support the market in the following ways: August 2015, any bank/NBFC/entity can be a corporate
agent of three health, life and non-life insurance
 Insurance intermediaries bring innovative marketing
companies – so a total of nine insurers if it wants to.
practises to the insurance marketplace. This deepens
and broadens insurance markets by increasing After great success in the European and other markets,
consumers’ awareness of the covers available, of the this channel has now also become substantial in the Indian
multitude of insurance options and their market over the last few years. The channel now
understanding as to how to purchase these insurance. contributes approximately up to 25 per cent of the new
 The insurance intermediary is well positioned to business for private companies in life insurance, and
encourage and assist in the development of new and approximately 15 per cent of the GWP for private
innovative insurance products and to create markets companies in non-life insurance (affinity). The primary
where none have existed. value that banks bring to the insurance business is
customer trust and a wide reach.
 Intermediaries gather and evaluate information
regarding placements, premiums and claims The following graph shows the channel-wise
experience. segmentation of the insurance companies and shows how
well the bancassurance and affinity have grown as a
 Intermediaries work with multiple insurers, a variety
channel.
of clients and, in many cases, in a broad geographical
spread.
 Spreading of information to consumers – Insurance
intermediaries particularly brokers and some agents
employ qualified, specialised and experienced
insurance experts and can buy insurance for their
clients at the most competitive premium rate and
terms.
 Insurance being an essential expense for all
businesses, a reduction in prices can have a large
impact on the general economy and in improving the
overall competitive position of the particular market.
Source: IRDA website – company public disclosures

LBS Journal of Management and Research 5

 Asif Ali Syed and Dipankar Acharya
According to the IRDA 2013–2014 report, the insurers
have sold 12.12 lakh policies through bancassurance
channel, its share in the health-insurance premium being
4 per cent. In life insurance, banks had contributed 17.22
per cent of the total group business in the case of private
insurers. This has become a very popular channel
especially with the private insurers. Bancassurance ranks
only second to agents and brokers. The attractiveness of
this channel lies in the fact that it delivers a promised top
line over a time period accompanied by a good
profitability.
Bancassurance has grown in India, but there is still a huge
potential. With the regulator changing the ground rules,
there is opportunity for more tie-ups with banks and offer
of a wider range of products. Another important factor
which has been highlighted is the staff behaviour and ease
of purchase at these banks which either promote or turn
away customers from purchasing insurance from banks.
Bancassurance remains the best means of reaching a
wider customer base especially for insurance companies
who do not have a wide network and want to piggyback
on the banks network. Hence, there are huge challenges,
but the growth opportunity is huge for the bancassurance
channel as an intermediary for distribution of non-life
insurance products.
Worksite marketing
Under this, insurers send team to a target group and
explain the products, either individual or group, that are
suitable to them at their place of work on a voluntary,
payrolldeduction basis. The target group may be
employees of a particular company, educational
institution or any kind of organisation. Personal and retail
insurance products are easily sold through this method.
The advantage of this method is that the entire catchment
area is available on site in a particular office or factory of
the client/ prospective client. This method is also good for
upselling and cross-selling. The payment of premium
could either be through payroll deduction or other regular
means. This is potentially a very strong medium for
generating new customers to be exploited by other
channels and later closed through either
direct/telephone/Internet or even the company’s agency
force.
6 Vol. XV, No. 1, January-June, 2017
Telemarketing/tele-assist
Telephones are used to approach buyers by insurance
companies for selling their products and services. The
insurance companies get hold of data of potential
customers and approach them through telephone, and
when the deal is closed on phone, the papers and payment
instruments are collected physically through a runner boy
or a courier agency. Companies are also using telephone
to advertise their products and expand their business.
Teleassist majorly supplements other channels such as
agency, renewals, Internet and digital marketing.
Internet and digital marketing
Internet marketing, or online marketing, refers to
advertising and marketing efforts that use the web and
email to drive direct sales via electronic commerce.
Digital marketing has become a very useful and strong
marketing avenue for the insurer. The insurer uses social
media, email, mobile marketing to reach the ultimate
customer quickly and directly. The net provides quick and
personal access to the customer for purchase of insurance
policies. The growth of sales through the digital channel
has been enormous over the last 3 to 4 years in all
insurance companies in India.
Web-aggregators
Web-aggregators take the advantage of the online space
to reach the customers and are able to present to the
potential customers easy accessibility and comparisons of
various insurers who are selling the same product so that
the customer has the best choices available for products
he is interested in buying. IRDAI has issued guidelines
for web-aggregators in 2011, 2013 and 2015, and
business is regulated under these guidelines and the web-
aggregators are accordingly licenced to operate. Factors
like website security, website design, customer services,
reliability and product portfolio are important
considerations that determine the choice of product and
the choice of web-aggregator by the customers of nonlife
insurance products.
Post offices
Post offices distribute insurance products with IRDAI,
allowing each circle of the Department of Post to act as a
corporate agent of insurers. Each circle of India post will
be treated as a separate unit and will be issued an
 General Insurance Industry in India – The Distribution Channels at Play
independent corporate agent licence with various
insurers. This will help in increasing insurance
penetration in rural India. The industry has not been able
to develop this medium as a good intermediary.
Affinity groups
There are professional groups and other interest groups in
which the group may take advantage of their homogenous
need to purchase insurance and also take advantage of
their large numbers to negotiate a good rate or price with
the insurance company. The sale of insurance through
groups such as business or professional associations is
becoming very common now. These affinity groups
would have a closed customer base, and this is likely to
be used by the insurance companies to sell their insurance
products. So in return for a set of customers, the affinity
group may enjoy the advantages of lower prices for the
insurance products which its individual members would
have purchased at a higher price. Further, if the products
are sold on the group platform, the group administrator is
eligible to remuneration.
Referrals
Referral means the arrangement between a referral
company and an insurer in terms of an agreement entered
into for the purpose of sharing of the database of the
customers of the referral company but does not include
the soliciting or sale, directly or through an agent,
corporate agent or an insurance intermediary including a
microinsurance agent of an insurance product.
Shop-assurance
Shop-assurance is the selling of insurance through stores
such as Chroma or Big Bazaar. An example of this is the
selling of burglary and fire policy on purchase of a
product from a store. Basically, this involves selling of
insurance through departmental stores and other stores.
This is very common method elsewhere in the world,
where one can virtually pick up a vehicle insurance card
(for example) in a departmental store and have this
activated at the counter while paying the bills or can
virtually get the insurance cover of the consumer durable
which has been purchased right from the store, these are
known as point of purchase policies. This is also
sometimes referred to as mall-assurance.
LBS Journal of Management and Research
Common service centres
Common service centres are being established by
Department of Information Technology through their
National e-Governance plan. The main objective of these
centres is to provide a physical facility for delivery of
eservices of the Government of India to the rural and
remote locations where there is currently nil or negligible
availability of computers and Internet. Common Services
Centres (CSCs) are a strategic cornerstone of the Digital
India programme. They are the access points for delivery
of various electronic services to villages in India, thereby
contributing to a digitally and financially inclusive
society. CSCs enable the three vision areas of the Digital
India programme.
CSCs are more than service delivery points in rural India.
They are positioned as change agents, promoting rural
entrepreneurship and building rural capacities and
livelihoods. They are enablers of community
participation and collective action for engendering social
change through a bottom-up approach with key focus on
the rural citizens. CSCs have presence at rural areas at
village and semi-urban areas. In few states, they are even
at urban locations such as district headquarters. As per
published data, there are 168 thousand active centres
across country. These centres are fully technology
enabled. CSCs initiated non-life insurance business in
2014. After initial learnings and operational hurdles, they
started growing aggressively in 2015. The acceptability
has been enhanced as these are manned by local people
for the local masses. They are mostly engaged in the
distribution of motor comprehensive insurance, personal
accident and crop insurance.
Insurance marketing firm
IMF is an entity that will be allowed to market financial
products approved by financial sector regulators, by
employing persons licenced to market the financial
products. IMF can sell insurance products of two life, two
non-life and two health insurers along with other financial
products such as mutual funds as per the present
regulations. There is no restriction in life and health
insurance; however, in general insurance, an IMF can sell
only retail products such as motor, householder and
shopkeepers insurance. The Insurance Marketing Firm
shall designate a principal officer who shall be the
executive head of the insurance-marketing firm and
7
 Asif Ali Syed and Dipankar Acharya
responsible for regulatory compliance to the authority on
all matters. Typically, these are intermediaries who are
bigger than agents but not big enough to be a broker. IMF
will be expected to deliver business from remote districts
and service retail insurance in semi-urban and rural areas
which have so far been neglected by bigger brokers.
Point of sale
In October 2015, IRDAI issued Guidelines on Point of
Sales Person – non-life and health insurers with the aim
to increase the growth and penetration of non-life and
health insurance in the country. The guidelines introduce
a new distribution model – point of sale persons (POSPs)
– who are individuals with a minimum qualification and
have taken the required training programmes. POSPs can
sell certain pre-underwritten products approved by the
regulator. A POSP is a person who has cleared class 10
and will be certified by National Institute of Electronics
and Information Technology. They will be employed by
non-life insurance companies and intermediaries for
selling simple products which do not require complex
distribution. What can a POSP sell? POSP will deal with
simple products whose basics the customers are aware of.
They will be involved with the distribution of personal
accident, travel insurance, home insurance and motor
insurance. How will Point of Sale (POS) impact the
insurance distribution landscape? Lower cost of acquiring
POSP will be required to have far lesser qualifications and
training than agents and brokers, which would result in a
8 Vol. XV, No. 1, January-June, 2017
lower cost of distribution for the products they are
allowed to be distributed. The POS will result in more
people being employed in insurance distribution which
will eventually lead to insurance reaching a greater
customer base than before and in turn, an increase in
insurance penetration especially in Tier 2 and 3 cities.
This will help in bundling of products; simple insurance
policies can be bundled and sold with other products, like
travel insurance can be sold along with tickets by the
travel agent. However, monitoring the POSP may be
difficult especially in checking that they do not solicit
products they are not supposed to, such as health
insurance. Hence, clear cut guidelines need to be given by
insurance companies in this regard and ensure that they
insure only those products which they are allowed to
insure.
However, this discussion will be incomplete if we do not
mention the Motor OEM (Original equipment
manufacturer) and Motor Dealers who play a big role
in the distribution of insurance for new vehicles. A
substantial part of the new vehicle insurance is done by
the dealers and the manufacturer lead set-ups engaged in
this. They usually take a corporate agency or form a
broker firm through which this business is coordinated.
CONCLUSION
Mentioned above are the channels which are operating
today in the insurance industry in India for sale of nonlife
insurance products. As is evident that the industry has
 General Insurance Industry in India – The Distribution Channels at Play
progressed in leaps and bounds since the initial years
when there were only two channels – the direct sales and
the agency channel. The newer channels have progressed
well, the penetration levels have improved, but the full
impact is yet to be felt especially in the rural areas.
Over the past 5 years, share of premium sourced through
direct channel has shown a decreasing trend, whereas
premium sourced through brokers has increased. Agency
share has remained stable. There has been a clear increase
in the newer channels. This is as per IRDA, handbook on
Indian insurance statistics 2013–2014.
Insurance intermediaries serve as the critical link between
insurance companies seeking to place insurance policies
and consumers seeking to procure insurance coverage.
Intermediaries, traditionally called ‘brokers’ or ‘agents’
or ‘producers’, offer advice, information and other
services in connection with the solicitation, negotiation
and sale of insurance. Over the last two decades, many
professional intermediaries have developed services that
go beyond the services related to the transferring of risk
from insured’s to insurers; intermediaries now offer
services such as the evaluation and implementation of
alternative means of funding for potential losses, risk
management strategies and claims management.
Over the last few years, there has been a growth in the
business acquisition through the non-direct channels and
intermediaries. Brokers, affinity, bancassurance all have
grown. There has also been a tremendous growth in the
newer channels like online, web-aggregators, Tele-assist.
The regulator (IRDAI) has also introduced various new
forms of distribution particularly to spread the insurance
coverage to the Tier 2 and 3 towns and in rural India.
Consumers now have on-demand access to endless
information, customised products at lower prices and
require less agent interaction than ever before. Insurance
carriers and brokers who’ve taken advantage of
ecommerce and digital media are gaining market share,
whereas smaller, agent-reliant players are experiencing
steady declines. Life, health and commercial insurers
have been slow to react to how digital technology has
already disrupted their businesses. Apart from remaining
competitive, they’re missing out on the opportunity to use
digital as a tool to accelerate growth, build competitive
advantage and be a leader in the modernisation of the
industry.
LBS Journal of Management and Research
There has been a growing use of the Internet or online
channel. Digital is shaping customers’ expectations on the
one side and allowing non-life insurers to engage more
closely and develop quicker solutions on the other. It
would allow insurers to move from commoditised
competition based on price to differentiation through
customer relationships and the ability to deliver what they
value.
The many distribution channels have created a customer
who moves between channels in the course of the
purchasing journey. These customers tend to seek the
‘best of both worlds’ – the ease of dealing with direct
channels for gathering information and the quality of
faceto-face advice when purchasing insurance policies.
The manner in which these customers travel from one
channel to another in the purchasing process is complex
and varies significantly, depending on the segment and
product. This has been brought out in an article by Kader
A, (2013.) Distribution Channel – Exploring the Growing
Hybrid Segment. Moreover, these customers not only
switch from online to offline channels but also from one
offline channel to another, further increasing usage-
pattern complexity. Insurers looking to tap this customer
segment must find out why these customers move from
one channel to another and the quantum of these
customers. The insurer needs to find out the reasons for
this shift and plug in the gaps or else the customer might
shift to another competitor. The insurer needs to create a
specific value proposition for these new age customers
and build a plan to deliver the offerings.
There has been unprecedented growth in the choice of
channels that customers can use to interact with the
insurers. Insurers are now adopting a multichannel
distribution strategy to drive operational efficiency. With
changing demographics of insurance buyers, insurance
companies are also taking to multiple types of distribution
systems. Based on the needs and status of target customer
segment, the distribution systems are chosen. A
combination of all or most of the above distribution
channels make it a multichannel strategy: channel
integration and a multichannel strategy is imminent,
difficult and yet essential in the long run. The successful
insurer will be the one who is able to manage the
multifarious channels well. He is able to deliver to the
customer with an optimal channel mix which is not only
the most suitable or optimal but is quick and prevents
leakages or drops in the sales pipeline. This would also be
9
 Asif Ali Syed and Dipankar Acharya

a mirror reflection of what the customer wants in the

presales, sales and post-sales period of the customer
journey.
Thus, the above analysis and survey brings to light the
various marketing intermediaries that are prevalent in the
non-life insurance Industry in India and how they can best
be utilised to approach the required customer segment.
How the intermediary market is changing over the years
in the Indian insurance industry and what are the
challenges which need to be tackled for the future? The
reason for the change in the types of intermediation is
definitely a fall out of customer expectations and the way
the customer wants to do these financial transactions
compared with what it used to be a decade ago and the
availability of the online mode. The success of the
insurance company will depend on how well it performs
in this changed scenario and is willing to adopt strategies
to mirror this multichannel distribution system of the
Indian insurance industry today.

REFERENCES
IRDAI website – https://www.irdai.gov.in/ – for various
statistics, guidelines and monthly journals released by
IRDAI.
Kader A, 2013. Distribution Channel – Exploring the Growing
Hybrid Segment, https://www.wipro.com/ blogs/abdul-
kader/distribution-channel—exploringthe-growing-
hybrid-segment/.

10 Vol. XV, No. 1, January-June, 2017

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