Ins i - Distbn Chn

8/3/2019 Ins i - Distbn Chn

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Insurance I

Session 11

Insurance Intermediaries:

Distribution Channels Traditional and Alternate Channels -

Agents, Brokers, Corporate Agents, Bancassurance,Telemarketing, Internet Marketing, Mall assurance andDirect Sales Channel


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Distribution:

The key factor in the business of Insurance

Low awareness level in thesociety about insurance

A tendency to avoid or postponethe purchase of insurance

Insurance is sold, hardly bought


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Distribution: The Key Differentiator

One of the major challenges faced by the insurers: Using

the right distribution channel to reach the customer

Companies grappling with the right channel mixRole played by distributors in insurance markets is critical:

Like in any other country the world over, insurance in

India has to be sold

Distributors are the touch points with the ultimate

customer


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Distribution: The Key Differentiator

Insurance distributors make the difference in

terms of:

Quality of advice for choice of productPost-sale servicing of policy

Renewal

Nomination

Assignment

Settlement of claims


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DISTRIBUTION OF INSURANCE

During the LIC/GIC- raaj

Distribution was largely confined to a SingleChannel

Tied Agents

Provisions in Insurance Act, 1938 relating toissues such as:

Licensing procedure

Ceiling on commission

Privilege of agents

Code of conduct


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With the notification of IRDA Act, 1999

and the opening up of the sector

Specification of

minimumeducationalqualification

Mandatory pre-licensing trainingand examination

Issue of licence byIRDA

Elaborate regulation

prescribing code ofconduct forintermediaries

Regulations

allowing corporateagents, brokers etc.


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Focus on

Multiple Distribution Channels

Indian market - a conglomeration of multiple markets

Apart from geographical spread, the socio-cultural and

economic segmentation of the market is very wide,exhibiting different traits and needs

Each of the segments within this conglomerationrequires a different approach


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AGENT

Primary distribution channel in India

80% of the individual business procured by tied

agents

The most successful of these agents are

hardly of the elite variety of salesman

The neighborhood do gooders -- postman,schoolteacher and the shopkeeper -- who

know the people and are themselves known in

the community


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AGENT(continued)

Gender - another relevant feature in the rural

context

Women to whom the customers can relate -nurses, gram sevikas

Can target the female segment of the

population more effectively

Separate strategies for the rural segment

example: Max New York Life gram sahayaks


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BROKERS

Recognized by regulations as intermediaries

Professionals with technical expertise

Act on behalf of clients to arrange insurance at

best possible terms

Represents several insurers

Remunerated in the form of brokerage

Operate in urban markets for the high-end and

corporate/group segment


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Bancassurance Models

Referralmodel

Corporateagencymodel

Jointventuremodel


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CHANNEL-WISE BUSINESS(2008-09)

CHANNEL-WISE SHARE (%) OF

INDIVIDUAL NEW BUSINESS

79.57

9.69 4.86 1.11 4.76

0

20

40

60

80

100

Agents

Bancassura

nce

Corp.

Agents

Brokers

Direct

CHANNEL-WISE SHARE(%) OF GROUP NEW

BUSINESS (2008-09)

8.96 3.28 0.75 0.48

86.53

020406080

100

Agents

Bancassur

ance

Corporate

Agents

Brokers

Direct


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CHANNEL-WISE LIFE BUSINESS (2008-09)

Private & Public Insurers

Channels of Distribution /Year

PrivateInsurers

Public Insurer(LIC) Total

Individual Agents

FY 09 47.44 76.9 65.45

FY 08 53.46 82.68 72.17

Corporate Agents (Banks)

FY 09 19.19 1.56 8.41

FY 08 18.2 1.15 7.28

Corporate Agents (Others)

FY 09 9.54 0.55 4.04

FY 08 9.92 0.27 3.74

Brokers

FY 09 1.96 0.37 0.99

FY 08 1.61 0.05 0.61

Direct Selling

FY 09 21.87 20.63 21.11

FY 08 16.81 15.85 16.2

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Ins i - Distbn Chn