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Submitted to Amity University for the fulfillment of MBA (Insurance
& Banking) in ASIBAS
OPPORTUNITIES AND CHALLENGES IN THE
DISTRIBUTION CHANNELS OF INSURANCE SECTOR
FACULTY MENTOR:-
MR. B.R. SINGH
AAST. PROFSR ASIBAS
SUBMITTED BY:ABHISHEK YADAV
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Acknowledgment
It gives me immense pleasure to convey my sincere gratitude to prof. B,R SINGH who
extended his full and invaluable support and encouragement in providing me with this
excellent opportunity to learn through this highly informative project work.
I would like to thank my faculty for his guidance and constant supervision as well as for
providing necessary information regarding the project & also for his support in
completing the project.
Abhishekyadav
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Declaration
I hereby declare that the project work entitled
OPPORTUNITIES AND CHALLENGES IN THE DISTRIBUTION CHANNELS
OF INSURANCE SECTOR
, submitted to the AMITY UNIVERSITY is a record of anoriginal work done by me
under the guidance of Faculty mentor, Mr. b.rsingh , AMITY UNIVERSITY, UTTAR
PRADESH, and this project work has not performed the basis for the award of any
Degree or diploma/ associate ship/ fellowship and similar project if any.
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Table Of Contents
SR. NO PARTICULARS PAGE NO.
1 INTRODUCTION 4
2 INSURANCE
NEED
7
3 SECTOR PROFILE 8
4 INDUSTRY
CLASSIFICATION
10
5 LITERATURE
REVIEW
16
6 RESEARCH
METHODOOGY
17
7 DATA ANALYSIS 21
8 FINDING AND
OBSERVATIONS
34
9 SUGGESTIONS 35
10 CONCLUSION 36
11 BIBLIOGRAPHY 37
12 ANNEXURE 38
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INTRODUCTION
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Insurance can be defined as protection against the unfortunate consequences of futureevents, by transferring the possible risk of loss from a person or organization (i.e.insured) to the insurer. In order to enjoy the benefits of insurance, the insured pays acertain sum amount of money to the insurer which is known as premium (i.e. cost ofinsurance cover). The event or accident, which may cause a loss is called a peril. The
business of insurance gives an assurance that the benefit will be protected. This assuranceis given only if the peril is likely, but not certain. If its occurrence was known to becertain, insurance would not have been possible. Insurance does not protect the asset. Itdoes not prevent its loss due to the peril. The peril cannot be avoided through insurance.The peril can sometimes be avoided, through better safety and damage controlmanagement. Insurance only tries to reduce the impact of the risk on the owner of theasset and those who depend on that asset. Only economic or financial loss can be
compensated through insurance.
The concept of insurance can be understood as that of risk pooling. For example:certain coastal areas are likely to face severe floods or typhoons. People staying in thoseareas are all exposed to the same risk of being affected by the damages caused by thesestorms. All of them will made members of a pool by the insurance companies with theunderstanding that if anyone of them suffers damage, all in the pool would contribute andshare the damage. The insurance company only acts as an intermediary to bring togethermembers of a community all of whom are likely to experience the same adversity andmake them share the adversity which may be experienced by any one of them. The
arrangement reduces the suffering of one, by distributing the same among many.
An increasing number of insurers are using multiple distribution channels as theycontinue to balance the needs of different groups of consumers against the cost ofdistributing their products and services. When it comes to insurance distributionchannels, one size does not necessarily fit all.
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Appended below are the various distribution channels:
Insurance Agents Trade Specific Agents (TSAs) Insurance Brokers Bancassurance Online Internet Portals Direct Marketing Cell phones /pda Worksite marketing Digital tv/satellite selling Supermarkets and other retail outlets Affinity channels and groups Insurance specific debit and credit cards Call centers
Insurance Agents
An insurance agent is defined under the Insurance Act (Cap. 142) as a person who is orhas been carrying on insurance business in Singapore as a registered agent for one ormore insurers, and includes an agent of a foreign insurer carrying on insurance businessin Singapore under a foreign insurer scheme under Part IIA of the Act. Individual agentsor corporate agencies can employ nominee agents to assist them in their businesstransactions.
For the purpose of registration with the ARB as an insurance agent pursuant to themandatory requirements of the Notice No: MAS 211, an applicant may be classifiedunder any one of the following:
Individual agents Corporate agents; i.e. sole proprietorship/partnership company registered with the
Account and Corporate Regulatory Authority, society/cooperative societyregistered with the Registrar of Societies; and Trade Specific Agents
All the above-mentioned entities may appoint nominee agents, including individualagents.
Trade Specific Agents (TSAs)
http://www.gia.org.sg/public_market_structure_distribution.php#agentshttp://www.gia.org.sg/public_market_structure_distribution.php#tradehttp://www.gia.org.sg/public_market_structure_distribution.php#brokershttp://www.gia.org.sg/public_market_structure_distribution.php#assurancehttp://www.gia.org.sg/public_market_structure_distribution.php#portalshttp://www.gia.org.sg/public_market_structure_distribution.php#marketinghttp://www.gia.org.sg/public_market_structure_distribution.php#marketinghttp://www.gia.org.sg/public_market_structure_distribution.php#portalshttp://www.gia.org.sg/public_market_structure_distribution.php#assurancehttp://www.gia.org.sg/public_market_structure_distribution.php#brokershttp://www.gia.org.sg/public_market_structure_distribution.php#tradehttp://www.gia.org.sg/public_market_structure_distribution.php#agents8/12/2019 Deleted Channls ,Opprtunities in Bank
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TSAs are engaged in a business of which insurance is not their core business, and usuallysell only one type of insurance product (e.g. travel agents selling travel insurance) in thecourse of their other business activities.
The list of Trade Specific Agent types are as follows:
Freight Forwarders Foreign Domestic Worker Agencies Foreign Worker Agencies Motor Dealers Travel Agents Electrical Protection Sellers
The General Insurance Agents Registration Regulations (GIARR) specify that a person(individual or entity) shall not arrange, or hold himself out as entitled to arrange, acontract of insurance as an agent for an insurer, unless and until he has:
Been duly registered with the ARB of the GIA (the registered agent beingclassified as either a "Cash Agent" or "Credit Agent"), and is issued with aCertificate of Registration by the ARB; and
Entered into an agency agreement in writing with his principal (the insurer that heis representing).
Before commencing and representing any insurers in selling insurance, all generalinsurance agents and Trade Specific Agents (TSAs) must register with the Agents
Registration Board (ARB) of the General Insurance Association of Singapore (GIA)through their principal insurers. The ARB will issue each of them with a unique GIAnominee number. Consumers can authenticate and confirm if an agent is registered withthe ARB and is authorised to transact general insurance business with the insurer byverifying the agents details in the agent search module on the GIA website at
https://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNominee
All general insurance agents are required to comply with the following:
General Insurance Agents Registration Regulations
Fit and Proper Criteria The Code of Practice for Agents; and Continuous Professional Development (CPD) Requirements, except for Trade
Specific Agents.
Under the Code of Practice for Agents, an agent shall not enter into any agreement orarrangement whatsoever for the appointment or engagement of any sub-agent.
https://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNomineehttps://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNomineehttps://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNomineehttps://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNomineehttps://www.arcm.com.sg/arcmv2/App/UI/Common/SearchAgentInfor.aspx?strApplicationType=SearchNominee8/12/2019 Deleted Channls ,Opprtunities in Bank
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Insurance Brokers
They are registered under the Insurance Act (Cap. 142) to carry on insurance business asagents of insureds or intending insureds. They advise individual or corporate buyers of
insurance on their insurance needs. They act on their clients' behalf to negotiate andobtain the most appropriate insurance covers at competitive premium rates from theirinsurers, exercising care and skill in doing so.
Currently, insurance brokers in Singapore are generally classified under the followingcategories:
Direct insurance brokers General reinsurance brokersplacement of reinsurance risks for general insurers;
and Life reinsurance brokersplacement of reinsurance risks for life insurers.
Reinsurance brokers negotiate reinsurance contracts between the ceding insurers andreinsurers. They generally represent the ceding insurers for placing the reinsurance
business and perform other necessary services.
A list of the insurance brokers licensed by MAS is available on the MAS website athttp://www.mas.gov.sg/fi_directory/index.html
Unlike an agent, a broker is free to place the clients insurance business with any number
of insurers. His duty is to provide independent expert advice on a wide range of insurancematters to the client. These include identifying the best type of cover to meet the clientsinsurance needs, and providing assistance when an insured makes a claim. The broker hasto exercise due care and diligence in understanding and satisfying the insurancerequirements of the client, and take all reasonable steps to act fairly in the interests of theclient. Although insurance buyers (i.e. ordinary retail consumers) may deal with insurersdirectly, the vast majority of commercial businesses (i.e. insurance covers bought bycompanies) are usually transacted through registered brokers. The complexity of manycommercial risks and large premiums involved often render a brokers services
invaluable to the insured.
As required under the Insurance Act (Cap. 142), an insurance broking company musthave in force a Professional Indemnity Insurance Policy.
http://www.mas.gov.sg/fi_directory/index.htmlhttp://www.mas.gov.sg/fi_directory/index.htmlhttp://www.mas.gov.sg/fi_directory/index.html8/12/2019 Deleted Channls ,Opprtunities in Bank
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Bancassurance
Banks, including finance companies, with their huge database of customers, sellinsurance through a network of branches. Almost all of the local banks in Singapore ownor have partnership agreements with insurance companies.
Bancassurance is the term used to describe the partnership or relationship between a bankand an insurance company, whereby the insurance company uses the bank sales channelin order to sell insurance products, most of which are personal lines.
Bank staff members, rather than insurance agents, become the point of sales or point ofcontact for customers. Bank staff members are advised and supported by the insurancecompanies through product information, marketing campaigns and sales training. Theyare also required to pass the relevant licensing examinations before they can sellinsurance or provide insurance-related advice.
Banks also make use of their websites to sell personal lines products, such as CardProtection Insurance, Household Insurance, Private Motor Car Insurance and TravelInsurance. Some banks even offer travel insurance products through their ATM networks.
Online Internet Portals
Company Portals
The growth of information on the Internet has also increased the amount of time peoplespend on it. This has in turn generated a new market for online offering of insurance
products.
In recent years, Singapore has seen the entry of direct-to-consumer insurance companiesselling individual motor, travel, home and accident insurance. Its business model entailsdirect underwriting via an online platform, supported by a fully staffed contract centre(operating 24 hours every day of the week) and a full-fledged claims department.
In Singapore, online insurance selling is limited mostly to personal lines productscovering home, motor, golf, travel, card protection, personal accident, hospital incomeand even domestic maid packages. General insurers involved will sell these individual
products through their own informative websites, which can provide for quotations andaccessibility to web brochures, proposal forms and policy wording.
Independent Portals
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Apart from the individual companys portals, there are also independent portals. Theseare deemed "passive" in nature, i.e. they are clearly not involved in any sales distributionfunctions, and need not register with the ARB of the GIA.
Passive portals are not involved in any sales distribution functions, namely:
They do not provide sales or product advice, but provide static product informationof the respective insurers without comments on product features, including
premiums not being deemed as providing product advice; They are not involved in the collection of premiums and proposals; They do not issue policy documents on behalf of insurers;. The fees must not be based on the premiums.
Note: The remuneration fee for such online transactions must not in any way be tied tothe premiums of the products being sold. If a fee based on premiums is paid, this will bedeemed as sales commission and will be seen as being involved in the sales distribution
process.
Portals not meeting the above-mentioned criteria will be deemed as insuranceintermediaries by MAS. Such portals have to be registered with the ARB as agents, orlicensed as brokers by MAS.
Direct Marketing
Rapid technological advancements have changed the way in which individual insurancecompanies can now serve their customers. At the same time, new technology has allowedfor more information on individual policyholders, which enables their buying habits to bestored in the IT systems of direct insurers. The build-up of such databases over the yearsis a useful marketing tool to harness the power of information technology by the insurers.They can then execute segment marketing to focus on customised products for nichetarget groups.
Insurers have directly marketed personal lines, such as Personal Accident Insurance,Travel Insurance, Private Motor Insurance, Household Insurance, Hospital IncomeInsurance, Golfers Insurance and even Domestic Maid Package Insurance, through their
informative websites. Intending insureds self-declare their pertinent information in thesimplified online proposal forms. Insurance product quotations and policy wording aremade available online. Payment of premiums is instant, made easy through online
payment via credit cards.
Insurers also periodically send out promotional product brochures (direct mailers) toexisting policyholders without servicing agents. Telemarketers from call centres ownedor appointed by insurers also phone customers to advise and market personal lines, as
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well as help to file claims. Insurers also embark on cross-selling strategies to serve theneeds of their customers.
OVERVIEW OF DISTRIBUTION CHANNELS:-
Distribution channel is the chain of businesses or intermediaries through which a good or
service passess until it reaches the end consumers .the distribution channel can include a
whole seller ,retailers,distributors and even the internet . channels are broken into direct
and indirect forms ,with adirect channels allowing the consumers to buy the goods
and services from the company and an indirect channels allowing the customer to buy
the goods/services from an intermediary .direct channels are considered shorter than
indirect ones. Traditionally ,tied agents have been the primary channels for insurancedistribution in the Indian markets . The public sector insurance companies have their
branches in almost all part of the country nd have attracted local peoples to become their
agents .The agents are from various segments of the society and collectively cover the
entire spectrum of society .the profile of the people who acted as agents suggests they
may not have been sufficiently knowledgeable about the different products offered and
may not have sold the best possible product to the client . however ,the customer trusted
the agents and company . this arrangement worked adequately in the absence of
competition . agents continue to dominate as the prime channel for insurance distribution
in india . the other distribution channels adopted by the insurers in india are:-
Corporate agents ,bancassurance ,brokers ,microinsurance ,worksite marketing ,direct
internet marketing ,telcassurance , shopassrurance . almost all the new players follow the
agency channel .the belief that all these channels will grow and seamlessly integrate to
bring in business seems a fallacy .though new players are coming in and global marketing
practices and ideas are being tested .
Why channels ?
Insurance is never bought and needs to be sold ,is a cliche often heard . but atrue one and
hence ,the need for the distribution channel .even if the products are loaded with features
to suit the market very competitively priced abd followed by outstanding post sales
service ,without an efficient distribution channel .who directly deals with the market is
not possible .
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The reasons for occupying the pride in te marketing plan of an insurance company
,charaterised traits of an efficient channels partner :
1. Someone who the prospect/customer trusts2. Someone who is knowledgable3. Someone who believes in the supremacy of the prospects/customers .
Before the indian insurance market opened to the private players ,essentially the
development officersemployees of the public sector insurance companies were the key
[marketing persons ,reaching out to the market .but the products and pricing were almost
similar for all state owned insurers and a customer had no choice .the reach to the market
of such a plan is restricted and the cost is very high ,particularly under the current detarrif
pricing ,however such employees marketing personnel is effective probably in a niche
segment .
The need of the intermediaries arises out of the very nature of the general insurance
product
1. Intangible2. Complex wordings3. Legal document
Distribution channels function as arteries in a marketing network that delivers goods and
services to consumers .today distribution is increasingly seen as one of the key marketing
variables ,capable of providing significant competitive advantage ,particularly in te
service sector where consumer,technological ,and regulatory trends have increased
competitive pressures markedly. The new era of insurance development in india has seen
the entry of innovative products ,distribution channels and the raising of supervison
standards ,intensified competition ,rising agent costs and product transformation have
driven insurers to seek more efficient more efficient approaches to operate in the market .
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Review of literature
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REVIEW OF LITERATURE :
A.The choice of channels is ultimately a fuction of two issueswhat the insurer wantsand expects to achieve through the channel and how much it is prepared to expend for
the purpose .typically in the marketing literature ,this has been examined with the
regard of 4 parameters that have been critical in assessing the efficacy of the channel :
1. Costby cost ,we mean the extent of financial resources and time that has to beexpended on a given channel .A channel would be considered cost effective if it
could reach a larger number of people speedily with least experience .the
traditional approach to selling insurance to selling life insurance in india was
through the commission agentit still remains the predominant channel as far as
LIC of India is concerned .with the entry of other new players focus shifted to
other channels .in particular the bank channel ,with its wide reach to customer of
the bank ,has been seen to be a preferred alternative to the agency channel.
2. CONTROL It refers to the extent of influence ,which the life insurer would beable to wield on the channel. When an insurer uses an independent intermediary
,like a broker or an institiution like a bank ,to sell its products ,it bears a risk that
the customers loyality would be to the intermediary rather than the insurer .again
,the employees and managers of a bank or other financial institution may haveother priorities and targets and may not be amendable to doing what the life insurer
wants .it is obviously rather difficult to develop a marketing strategy which is
solely or largely dependent on the performance of another institution .
3. COMPLEXITY :- complexity can arise in two ways .firstly, there is the difficultyin understanding what the product is and does ,what the charges are ,and how it
compares vis- a-vis others .secondly,the customer has to be convinced about how
the product would actually match with his or her needs and what value outcome itwould result into .the more the complex and intricate the product ,the more it
would call for professional consultative selling and financial advice .
4. Customer outcome The final clincher on marketing channel decisions isprovided by the customer outcomes that the life insurer seeks to achieve through
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their deployment .there are two issues that are to be resolved here(a).what is the
nature of relation ,which the company wishes to establish with its customers and
secondly ,what is the role that it envisaged for the channel in this regard . This also
depends on the type of customer the company has targeted .
SOURCE. :-IRDA JOURNALS
B.STATE OF DISTRIBUTION CHANNELS IN INDIA :-Insurance industry in india is no longer the sole domain of agent advisors .insurers are
using all the distribution channels to improve their premium income and market share .
Bank promoted insurance companies are naturally using bancassurance as the mostpreffred distribution channel. Other insurers are using tied agency force the most
followed by alternate channels like bancassurance ,brokers,direct marketing and referrals
,insurers are hardly having any channel specific product ,i.e they al are using possible
channels to send all their products . all said and done ,their 79% business comes from tied
agency channels .
Whatever progress this industry has been able to make so far ,owes a lot to the brand
value of LIC .people of all customer segment have a reasonable trust on this orgnisation
.This trust has been built not just because of efficiency and integrity shown by itsemployees ,but also because of a section of agents ,by way of providing great services to
the customers and also by maintaining a harmonious relationship with the customers
.These full time agents worked patiently and diligently for years ,before reaching a
position of eminence .In insurance salesmanship one cannot become famous overnight
like rocket singh .Here ,selling based on needs.and then post sales servicing .
C.INDEPENDENT DISTRIBUTION CHANNELS :-Independent distribution is the leading sales channel for many core industry products.Today it accounts for more than half of the life insurance written and two-thirds ofannuity business written. In the independent realm, advisors are actively screening carrier
partners, while independent distribution networks (IMOs and BGAs, for example) havebecome central to distribution strategy.
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The independent distribution networks now play a critical role in the competition forsales talent and market share and today more independent advisors prefer to place their
business through an intermediary as opposed to placing it directly with a carrier. Withmuch of the business now written through independent channels, and with industryconsolidation creating large mega-distributors and distribution networks, theseorganizations now have significant leverage among manufacturers. In an effort to
differentiate themselves, these independent organizations have gone beyond thetraditional mix of servicesto providing other value-added support such as advancedmarketing attorneys and marketing services.
Further, these independent distribution networks will seek new sources of revenue, whichlikely will lead them to expand into new markets, offer new services, or tap into newsales channels. Carriers must decide what value proposition, beyond product, they will
provide to these organizations in order to have a seat at the table. These trends raise thequestion of how far carriers need to go in providing services to these increasinglyvertically integrated marketing organizations. As supported in LIMRAs 2012 TurningPointresearch, for both the independent organizations and the carriers, key to their futuresuccess will be having a clear strategy for differentiation and executing it well.
http://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-
Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-
Insurance-and-Other-Financial-Services-Products.aspx.
D.MULTI DISRIBUTION CHANNELS :-The Indian life insurance sector is evolving and growing substantially and is one of the
key drivers of Indias economy. The Indian insurance sector is moving rapidly towards
international standards with new and innovative product offerings. With rising income
levels, customers are demanding more sophisticated risk solutions. Life insurance was
once purchased primarily as a tax-saving tool. A paradigm shift in regulation led to morecustomized solutions. The number of insurance holders has more than doubled to 5.32
crore policy holders in five years to 2010, with the total life insurance premium tripling to
Rs 2.65 trillion during the same period. have a deep, actionable and detailed analysis of
the end users or target segments, so the distribution channel can be set up to reach the
segment effectively. Inefficient customer segmentatio n and targeting actually ends up
http://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspxhttp://www.soa.org/News-and-Publications/Newsletters/NewsDirect/2013/may/The-Changing-Face-of-Distribution--Recent-Developments-in-Face-to-Face-Distribution-of-Insurance-and-Other-Financial-Services-Products.aspx8/12/2019 Deleted Channls ,Opprtunities in Bank
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delivering less value to the customer and hence to the insurance company also. This
whitepape r explores the need to develop an effective multi-channel distribution strategy
that meets customer demands and delivers differentiating customer experience. Emerging
Trends In the last few years we have seen unprecedented growth in the choice of
channels that customers can use to interact with the business. Insurers are now adopting a
multi-channel distribution The Indian customer is offered innovative solutions thatcombine strateg y protection and long-ter m wealth creation. Improved services ,
demographics of insurance buyers, Insurance companies are also sound advice and
innovative products are provided through a using multiple types of distribution systems.
Based on the needs range of distribution channels such as banks, agents, direct offices
and status of target customer segment distribution systems are and online platforms. The
emergence of a more diversified and chosen. A combination of all or most of the
following distribution multichannel distribution network has revolutionized the insurance
channels make it a multi-channel strategy: sector, with increased access and better serviceto customers. Broker to drive operationa l efficienc y. With changin g Individual
Agents Apart from the conventional ways of marketing an insurance policy, which
include brokers, agents, kiosks, worksite marketing and direct marketing, insurance
companies now explore new avenues Corporate Agents Micro-Insurance
Bancassurance Cell Phone/PDA of innovative and attractive range of distribution
techniques that Kiosks can be exploited to their advantage. Today, an insurance
company Internet leverages multiple channels for distributing its services to target E-
commerce customer segments. Work Site Marketing Direct Marketing Internet
Distribution channels not only affect the top line and bottom line of a company but also
raise concerns on the cost management of the firm. In this fluid environment, an
insurance company needs to Digital TV/Satellite Selling Supermarkets and other retail
outlets Affinity Channels and Groups Insurance specific debit/credit cards Call
Centers 3
http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-
insurance?from_search=5
http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-insurance?from_search=5http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-insurance?from_search=5http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-insurance?from_search=5http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-insurance?from_search=5http://www.slideshare.net/NIITTechnologies/multi-channel-distribution-in-insurance?from_search=58/12/2019 Deleted Channls ,Opprtunities in Bank
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E. FUTURE CHALLENGES :-Effective analysis of distribution channel effectiveness requires assessment, solutions
design, implementation and performance monitoring.
Determine whether the problem or opportunity is at the agent or management level. If it
is at the agent level, then look at compensation and market alignment and training; if it is
at the management level, look at performance measurement and expectations.
Depending on the assessment, solutions appropriate for the problem or opportunity must
be structured.
This may mean redesigning compensation, refining agent selection methods, identifying
markets and matching agents to those markets, and/or improving sales, or product
training. At the organisation level, the solution may mean redefining agents jobs, or
organising appropriate branch-level support structures for sale administration.
Finally, once a solution is devised, the company must implement changes and develop
new measurement tools to monitor the ongoing performance of the sales force and toidentify future potential problems.
http://www.langmead.com/insurance/Q107/10096feature3.htm
F. INSURANCE TREND:-The main distribution channels in lifeinsurance are the traditional individualagency channel, corporate agency(banksand others), broking channel and direct selling (which includes online selling). From an industry perspective, itis an agency-dominated business with 90% of the total premium being sourced from the agency channel. This trend isprimarily a result of LICs agency dominated (at 98% of business) business model. Private sector insurers have a more
balanced channel distribution, with agenciescontributing 47%, banks contributing 33%, corporate agents 9%, brokers 5% and direct sales 6%.
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OBJECTIVE
ANDSCOPE OF STUDY
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3.OBJECTIVE OF THE STUDY :a.To study all the distribution channels available.b.To examine opportunities and challenges faced by the
various distribution channels.
4.SCOPE OF THE STUDY :a. The members of various distribution channels are able to
study their future challenges and opportunities .b. Distribution channels are able to service their customer more
efficiently.
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DETAILED ANAYLYSIS
OF
DISTRIBUTIONCHANNELS
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1.AGENTS:An insurance agents plays a role of a communicator ,counsellor and facilitator ,for
insurance products available in the market . An agent is one which has entered into an
agreement with aparticulars insurance company to sell only that companys product for a
particular insurance company ,an agent dedicates his time an services to enhance theprofitability of a particular insurance company .the role of an is also vital ,as they are,
for the reputation of the company are responsible for the work and they also have their
obligations to their customers .
The agents are from various segments of the society .a person who has lived in locality
from many years ,sells the product of the insurance company with a local branch .this
ensures the last mile touchpoint being closer to the customer .
An Agent is the only point of contact between customer and insuranceand is expected tobe fair and ethical while selling a policy . in terms of coverage ,individual agents have
their limitation according to their skill ,experience and productivity .in the present
scenario ,lack of adequate knowledge of the competitive comparison with the
competitors product has posed challenges to an agent growth and coverage .due to
inadequate of the products agents sometimes mis-sell insurance products to sustain
themselves.
But in handling the product complexity and control ,an efficient agent scores over the
other distribution channels .in case of any complex product ,agents who usually have anyone relationships with their respective clients often efficiently dedicate their .as agents
are dedicated to one insurer they can be properly be managed and trained .
Agents are affected by social function in the market is the considerable respect for age in
Indian society and the belief that an elderly person who knows better. a very young
market by means of which they may not be able to buy insurance to a large segment of
the middle class that appeal to a solid trustworthy looking person,.
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Agency distribution model plays important role as it maintains good relationshipwith the customers ,by providing pre-sales and post sales services to customers .it
is an atrctive model as it is cost effective and helps to convince the customer to buy
insurance covers with personal attention .however the agency distribution model
needs to update with the latest technology .nowadays ,insurance companies finding
difficult to manage and retain the skilled agents .
In the Indian context :- to cater the market insurers are also recruiting some retiredgovernment employees (VRS from banks ) to sell some lines of product such as
pension plans ,annuities etc.
Gender of agents also plays an important role specially in rural context that makesdifference ,especially for the female population .womwn to whom the customer
can relate eg nurses ,gram sevikaascan target the female segment moreeffectively .some companies have also adopted a version of this strategy by
appointing gram sahayaks to sell and service the rural customers.
The corporate agency channels which is the key distribution channels for insurancecompany is now getting out of favor of life insurers .This distribution channel is
loosing out preference due to stringent licensing norms and new persistency
guidelines .
Insurance company has to develop an alternative channel, who can replacecorporate agents not completely at least partially .
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2. DIRECT SELLING :-
Direct selling occurs when insurance company insurance company directlyconnects with their prospective or actual client .This can be done through different
modes using a direct sales force ,catalogs ,website ,email ,direct mail
,telemarketing ,seminars ,trade shows and other one-to one techniques, tocommunicate and sell to their customers and clients .however in india sales
through internet,phone or mail are not significant in india .
With the growing popularity of internet in the Indian household the popularity ofthis distribution channel is consistently rising .direct selling through direct
marketing staff of insurance has contributed to about 23.80% in the total number of
policies sold in 2011-2012.
The internet makes direct marketing more easier ,more targeted ,more flexiblemore responsive ,more affordable and potentially more profitable than ever.
The ability to reduce the transaction cost of interaction between buyers and sellers,has always been ackowleged as a central motivation for the use of web .
Due to cost advantage , insurance companies may provide a price differential totheir direct customers. This distribution channel has advantage over cost and contol
over other channels.
Direct marketing creates face to face communication ,builds cordial relationshipbetween insurer and insured .
Internet facility has helped to make an interactive system can make it possible forlikely customers to feed in basic information about quotations from different
companies ,before they make choices.
But, considering product complexity it may turn out as a worst performing channelas for a complex understanding trust may be build up only via one to one
correspondence .
However in india mobile phone ,internet ,news papersetc . still have a lowcoverage on a pan India basis due to their inassesibilty as well as unawareness and
distrust for virtual media to the common people in india .
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CHALLENGES IN ONLINE DISTRIBUTION :-
1. product innovation: Since the products bare sold through traditional channel notblend well online too, it becomes that companies innovate and design specificproducts for sales. This again involves a cost companies may find it a bigger toinvest in product innovation. products that can be clearly by the potential customer
on visit to website is the need of the hour. It is observed that the complexity of theproduct many a times has been a major hurdle in converting a potential sale intoactual one.
2. Transparency: The pricing of the product on this channel would be moretransparent than those in the traditional channels. The companies therefore, mustalways keep their prices competitive and updated to the market changes andrequirements.
3. Security: As more and more transactions take place online, one of the importantconcerns that customers would face would be the security of their personal data.The companies would require to make investments in ensuring the data securityand keep upgrading the same from time to time. The customers would expectrobust and sturdy online transaction safety architectures for the security of theirtransactions. Since this involves a cost to the companies, they would weigh itagainst the present and expected sales. This may result in loss of potentialcustomers on account of insufficient data security.
4. Positioning/segmentation: Normally, it is expected that the younger populationand those owning a mobile phone or having an internet connection would beappropriate segment for selling insurance through direct mode. However, one mustrecall that those who aspire to own a mobile and those who have remote access tointernet also can be the segment that can be targeted by companies. Rural segmentswhich are very price sensitive and have problems of inaccessibility can bemarketed insurance through this channel. The online model proffers suchindividuals the twin reward of cost saving Even if they dont own an internetaccess, they can well be made aware of the nearest center where they can beprovided access. and convenience. Even if they dont own an internet access, they
can well be made aware of the nearest center where they can be provided access;
the positioning however should be price advantage that they would derive. Onlinechannel must be positioned as easy, safe and affordable. Train specific people to
propagate and utilize the online mode, who can assist those who are notcomfortable using the system on their own. This would bring in a culture of onlineusage over a period of time.
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5. Pricing: Since there would be no commission involved in direct sales, there wouldbe an expectation among the customers that the benefit would be passed on tothem. Moreover, price comparisons become quicker and faster and the companiesneed to keep it at par with the market standards lest they lose out on the customers.The pricing must also be simple for the customer to understand.Virtual Interaction: Among others, one reason as to why agents are the most
preferred channel in India is because there is a personalized interaction and one toone relationship that is created between the insured and the agent. This does notexist through online mode; with the advancement of technology, a virtualinteraction can be created which would be more personalized and a call center thatwould be readily available to assist the customer in case of any queries in the
process, may create additional demand for this channel. This would enable andconvert the entire exercise of buying an insurance product wholesome andfulfilling to the customer.
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Brokers:-
brokers are not tied to any one insurer and are facilated to present as many options as
possible to clients brokers have unique advantages as they can combine the life ,non-life
and health insurance requirements of a client .the positives are that the broker in the
urban arena can do wellwiththe elite and upper middle class customer .this feature
allows brokers to work with relatively smaller companies in a cost effective manner as
individual insurers and agents would not have the same in serving the small clients .
A broker can also look across all related companies to pick the right option as bin that
brokers are constantly exposed to people and product offerings of different companies
.brokers also update themselves via training programmes conducted by different
companies for proper understanding of market and developments .
Brokers are influenced by the bargaining power of companies and can have a bias
approach towards a particular company .
In vast majority of cases , abroker compensation comes in the form of a commission as a
percentage of the insurance premium creating a conflict of interest in that brokers
fianancial interest is titled towards encouraging an insured to purchase more insurance
than required at a higher price.
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Challenges:
Insurance brokers need to continue upping the ante to set yourself apart from thecompetition and the increasing tendency of the players directly in the course of the manychanges in the industry in recent years .
meet the needs of their customers in the currentconsumer -oriented environment focused on compliance.
It requires specific skills , transparency and professional advice , the back- bendingpressure on brokers separation value added operations of those whose service accesses isset too short.
expected to grow as consumers seek to continue a better price options . To counteractthis, will need brokers to prove their worth and avoid the bad press to produce directinsurer for them to stay in business and grow their market share.
-to -face interaction and more about convenience and
advice. It is necessary for brokers to to improve their technology and computer skillsinformation not only about the products but also to manage their customer relationships.
Consumers are easier, faster and more effective Search Help amending Directives and
communication
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Worksite Marketing
Work site marketing is an innovative channel to distribute insurance products at workplaces. This channel is not in practice in India. But it is already popular in US, UK,Australia, Netherland and South Africa. Work site marketing works with the mutualunderstanding of insurers and employers. The co-operation of employer is essential forthe success of worksite marketing. Of course, worksite marketing is a complex process. It
involves the process that begins with educating the individual employees on the insuranceproducts, then selling and administering those products. The main product is pension, andin addition Health care products, Risk cover simple products and General0020insurance
products can also be sold. There is a huge growth potential for worksite marketing inIndia. There are many employees working in factories, companies and other departmentswith uncovered or underserved insurance. Pension plans and other risk cover plans can besold with the co-operation of employers. Generally, premiums are paid through theemployer by salary deduction method. Regulators and the insurance companies in Indiashould plan for adopting worksite marketing as a distribution channel.
In South Africa, worksite marketing is largely driven by trade unions and in Australia,there is an obligation on the part of employers to provide retirement benefits to his or heremployees, which is made to boost work site marketing. Therefore, it can be said thatwork site marketing is a win- win model. It is advantageous to employees, employers andinsurers.
Benefits to employers: Helps to attract better employees by offering greater fringe benefits
Reduces staff turnover
Improves productivity Creates long term goodwill Cost effective
Benefits to employees:
Supplements existing fringe benefits Convenient, pay roll deductions
Enjoy group discount rates
Risk coverage can be extended to spouse and children Greater financial security
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Benefits to insurers: Promotes insurance business
Profitable as the chances of lapsation of policies becomes very less brings platform to provide better services to employees and customers
attracts new customers
BANCASSURANCE :-
Bancassurance broadly refers to the collaboration between banks and insurers,to
distribute insurance products to the same clientele or same client base.bancassurance is
sen as an emerging and important distribution channel globally and has risen in arelatively short time due to its benefits over other channel ,in terms of operational cost
and effectiveness due to wide consumer network .
The success of banca as a distribution model very much depends upon the degree of
integrity .distribution agreements are merely associated with distributing an insurance
product .while joint ventures mutually share their product as well as customer .need for
clarity on the operational activity of the banc assurance
i
ie, who will do the branding, if the insurance company pulls to put a person in thebranch bank or the bank branch train and put one of their own etc. should be carefully
defined
besides this in case of direct compensation to conventional banking products ,banks Staff
may sell insurance products resistant to.
most large retail banks build a great deal of trust with broad segments of consumers.
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Challenges of Bancassurance:
The disadvantages associated with bancassurance are as follows:
Economic viability of banks since bancassurance is a volume based business Training people and the lack of vision and awareness Useful for certain lines of productsNot suitable for non-life insurance Initial investment in systems and processes and people in training
India being one of the most populous countries in the world with a huge potential for
insurance companies ,has an envious chain of bank branches as the lifeline of its
financial system .banks with over 65000 branches and 65% of household investment are
the backbone of the Indian financial market
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BANCASSURANCE
o The main reason may be the complementary nature of life insurance and banking
products. Bank employees are already familiar with financial products and quickly adapt
to the sale of insurance -based savings or pension products .
On the other hand , the non-life market requires special management and sales skills
that are not widely used in the bancassurance necessarily . In addition , such skills require
significant investment in training and motivation , and therefore additional costs.
Life insurance products are generally long -term products that customers need to ensure
full confidence in the institution that invests their money and , as we know , the banks
have a better picture and more confidence than the insurance companies.
Bank Consultant Can use knowledge about their customers to target their finances
advice on specific needs. This is a great advantage in life insurance and less important in
Personal insurance .
Some professionals in the claims management aspect of personal insurance , which
could have a negative impact on the brand image , referred to. This seems to explain why
for a long time hesitated bancassurance operators , this type of product .
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Benefits to the insurance company :
Basic advantage through bancassurance , the insurance company significantly expanded
its customer base and provides access to customers that were previously difficult to
achieve , and even enough to convince an insurance company to ally with a bank;
The insurance company to make its distribution methods and procedures has varied toavoid over- dependence on a single network. Diversification reduces the risk ;
The insurance company often benefits from the trusted and reliable picture , people are
more likely attributable to banks ;
The insurance company also benefits from the reduction in selling expenses in relation
to the cost , which is usually the same for banking products and insurance products. In
traditional sales representatives, because the distribution network is This means that the
products are sold for less .
Advantages for the bank:
First, a bank sees bancassurance as an opportunity to create a new stream of income and
diversification of business activities. Since 1990 , a period which , it is through increased
competition between financial institutions and reduction in the profit of the banks to find
the margins that drives the need for new business look .
The bank becomes a kind of "supermarket" or " one-stop - shop" for financial services,
in which all customer needs - whether financial or insurance -related - can be met . The
broadening of the product range makes the bank more attractive and can strengthen
customer satisfaction and customer loyalty.
Distribution costs can be seen as marginal because , in most cases, it is the bank'sexisting employees who sell insurance products . Among other things, the one-stop - shop
model optimizes the use of the network and increases the profitability of the existing
store network .
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Benefits for the consumer:
As mentioned in the benefits for the bank , the consumer enjoys better access to all
financial services from a bank that offers both banking and insurance products :
Since the distribution costs are lower than in a traditional distribution network of
consumers can generally cheaper than insurance products through traditional channels .
In addition, premium payment methods Club Fanned because premiums are collected
directly from the bank account .
The special relationship between the customer and the bank means that it provided abetter match between the wha the needs of customers and solutior of the Bank.
Benefits for legislators :
The role of the regulatory authorities or the government itself, to make laws to ensure that
the risks are taken by the financial institutions of the country and actively managed in a
way to keep public finances sound controlled. However, events may occur that are
beyond the control of individual and national managers that can affect the entire financial
system. These risks going under the name of " systemic risk " .
For financial institutions Bancassurance can be a means to limit such system. :
risk , because it is the Bank diversified sources of income , so that the business stable and
thus safer for its customers . On the other hand, certain authorities may think that the
deregulation of financial systems in order to increase surplus to systemic risks of a
country. That is why in many countries , banks are still not
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Opportunities:-
:
ChallenQes in the distribution of insurance Mirco Droducts :
As is the case with another insurance product in Micro- insurance , there are majorchallenges that are seen in the development and distribution of suchMikroversicherungsproduktezu :
a) Infrastructure: Due to the nature of the low premium products, it can not physically beviable for the insurance company have their own offices to cater to this population in
rural India . As such, an alternative distribution mechanism that has a long- termprospective and controlled well adjusted systems and procedures
Manage premium collection and maintenance is required.
b ) Medical Network : Building a Medical Network in this area is another challenge ,which then restricts the development of certain types of products that the rural population, which could require medical examination may be offered either before or
Transmission output .
c ) Manpower : The quality of the workforce in rural India is little knowledge andexperience of the sales of these products. Second, the rural markets are not a preferredlocation for the employment of the youth of today .
d ) Technology: This is another limiting factor , and a challenge in maintenance. Thetechnology factor is a huge obstacle in the remote control for the underwriting and
pressure of policy documents.
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e) Actuarial restriction : Lack of accuracy of mortality data available and the accuracy oflapsation data is another major challenge in this segment.
f) Awareness: Low awareness of life insurance itself and specifically its products ( the
term and duration of the return premium) is a major challenge in the segment. Lowliteracy rate to mislead products or distribution channels (multi -level marketing , where
people have lost money ) have created a negative feeling towards such products.
g) Fraud Management : misselling of products and in the absence of structural collectingmechanism , misappropriation of premium collection is another challenge that confrontsthe insurance company.
h) Training: Logistical obstacles in the implementation of training program in rural areasand especially in the local language , is another challenge that needs to be done.
i) Product Design : With the kind of population in rural India , with seasonal / irregularincome , the design of the products is a major challenge. The company must at leastenable transaction costs , the factors that contribute to difficulties in controlling the moral
dangers of reaching the minimum turnover Despite the limited data and skills foractuarial analysis of insurance and reinsurance. is a challenge.
It's a win -win situation for everyone involved - the customer , the bank and the insurer insuch a tie on .
a) for the customer : Easy, inexpensive, are customer-friendly products through thebanking channel , the maintenance of the pre-sale , sale and after sale services rather than
made . This is very convenient for the customers, especially in the rural market .
b) For the Bank: An excellent opportunity for cross- selling or up-selling is veryconvenient for the customer loyalty and get a bigger pie of the wallet. It is also a greattool to not deserve - Interest income for the rural market where such options are verylimited .
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C) For insurers : Helps to use the large branch network of the Bank , to dig deeper intorural pocket in the most cost effective manner and the use on the strength and brand valueof the bank .
New emerging distribution models: -
Potential distribution channels
1.Direct Marketing
Direct marketing in the past, especially in the form of direct mailing of banks, made totheir account holders , marketing insurance products through their allied life insurance
available. However, only the insurers were entitled to sell these products . As banks andbrokers now allows life business to sell directly , these types of direct mail are likely toincrease. Moreover, as the range of products available , the sales are contributed toexpanding direct mailing likely to increase. At the same time , spending on advertising byinsurers have also grown significantly , as insurers try to attract the attention of the publicon a wide range of products and services , as well as educate them about the benefits oflife insurance and in particular the protection type - Products .
Second E -commerce
The Internet has not for the insurers a major source of distribution. The population ofover one billion in India were estimated around 9.5 million people , be Internet users .Some life insurers have a site where the services are provided to mainly access to productinformation and rate quotes , etc. are restricted Nevertheless , premium payments can bemade by credit card, internet, e - " design are made transfer, direct debit and bankers , andthis should allow insurers to better develop an e- strategy.
3rd bancassurance
Bancassurance will emerge as an important new way of distribution of insurance in India." The Reserve Bank , in recognition of the symbiotic relationship between banking and
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insurance industry , has three ways of participation of the banks identified in theinsurance business
(i) providing fee-based insurance services without risk participation,
( ii ) investing in an insurance company for the provision of infrastructure and services
support
( iii ) establishment of a separate joint venture company with Risk Insurance
Participation. "
4. Networks and Decentralization
Online insurance sales are growing. Online sales of insurance products continue to grow.Each year, more customers obtain quotes, for and even purchase, coverage over theInternet. A 2007 study by international strategy consultancy Celent predicts that by 2011nearly 30 percent of auto insurance sales will take place on the Web. In 2007,
Network/partnership models are flourishing. The opportunity to greatly expand thedistribution channel and reach new customers through bancassurance is enormous.
5. Mobile phone technology:
Access to high-speed networks remains unequally distributed around the world, althoughsome emerging markets are leapfrogging over legacy infrastructure and moving straightinto mobile and wireless technology. In South Africa, insurers are issuing micro-insurance life policies to low-income customers whose premiums are attached to theircellular phone bills. Insurance customers in India may stay in touch with insurers throughtext messages that deliver policy information and updates to their phones.
6. Radio-frequency identification(RFID) Developments in tracking technologies offera more accurate method of assessing and minimizing risks. RFID chips in automobilesserve as theft deterrents Of the population of over a billion in India around 95 lacs
people were estimated to be Internet users. Some life insurers have a website. in whichthe services are provided, especially for the access to product information and rate quotesetc. limited16. TakafulTakaful is an Islamic insurance concept which is founded on Islamic muamalat (bankingtransactions), observing the rules and regulations of Islamic law. The takaful industry isgrowing at a faster rate than the conventional insurance segment globally by 35 percent,
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and it is increasing in popularity in countries with a sizeable Muslim population such asMalaysia and This fast growing industry offers attractive and affordable products toconsumers, while being religiously and culturally appropriate
21Shoppassurance (Mul ti -Company Service Centr es)Another innovative distribution channel that could be used is the nonfinancialorganizations. The Indian retaii market is the most fragmented in the world and at
present, organized retail channel is around 3% of total retail business. But the organizedsector is expected to grow at a rate of around 30% per annum. With this huge growth rateof the retail sector, it can become a viable distribution channel for life insurance products.In the life segment.group creditor insurance may be the most suitable product for thischannel. However, repeat business or renewal business cannot be assured in this system.Scope of retail business in life insurance is limited as compared to non- life insurance.
.
22. Sell ing Lif e I nsurance through Pharmaceutical Agencies
A simple tie up wth pharmaceutical agencies will help insurers to tap the huge potentialmarket at a very low cost. Pharmaceutical agents can be utilized to sell life insurance
products, through their well bulit network and contacts. The Indian pharmacy market isthe most fragmented in the world and at present, organized pharmacy channel is around6% of total retail pharmacy business. But the organized sector is expected to grow at arate of around 25-35% per annum. This shows a huge growth rate of the retail pharmacy
sector, which can be turned into a viable distribution channel for life insurance products.In the life segment, group creditor insurance may be the most suitable product for thischannel.
23. Sell ing Li fe I nsurance through Anganwadi Workers
This channel will offer a great opportunity to the insurance companies, to meet theirsocial responsibility as well as to secure a strong footing in the rural market. A total of11.71 lakh anganwadi workers including workers of mini-AWC5 and 10.97 lakh AWHsworkers are serving in rural India. The huge untapped market for insurance is the rural
and social sector.
24 .Sel l ing insurance thr ough Electri city Department, Petroleum Gas Agencies, and
Cable/DTH Operators
Insurance companies can tie up with the electricity department, to provide protectionagainst fire insurance, caused by electricity. A small monthly premium can be charged
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along with the electricity bill to cover for the fire insurance. Likewise, a tie up withpetroleum gas agencies by insurers, with a collection of small monthly premiums, canprovide protection against fire caused due to leakage of petroleum gas. Since theseservices are contractual in nature, they offer a good match for selling of insurance
products. Cable and 0TH operators can be used for selling all insurance products.Discussion and Conclusion The insurance marketplace is undergoing a transformation
that may finally lead to significant changes in how consumers purchase insuranceproducts. With about 200 million middle class households, India shows a better potentialfor the insurance industry. A variety of distribution channels
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FINDINGS
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FINDINGS:-
1. Agents are the traditional channels of distribution ,they are having high level ofcontrol ,coverage ,complex product handling capability .on the other hand agents
are having lack of depth of knowledge, experience and comparative skills
regarding competitors product .
2. Agents are facing challenges as due to the presence of stringent licensing normsand persistence guidelines and also the commission to agents are very much
limited .
3. Direct selling is a new channels having different modes of communicating withthe customer it is more flexible ,targeted ,responsive, but it is not suitable in case
of complex products as technicalities cannot be easily understood.
4. Direct selling channels are having problem of network connections as majority ofareas are not having internet facility .
5. In india internet is not so common till date as to develop businesses with directselling channels of distribution.
6. Brokers are the best channel from customers perspective as they help in getting thebest suitable product out of all products offered by the companies .
On the other hand brokers are influenced by the biasness towards one company.
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7. Brokers are the most cost-effective channel due to non-presence of large players inthe industry .
8. Worksite marketing channels are very much suitable from employees point of viewas there is also a huge opportunity of this channel in india .large chunk ofcustomers can be targeted with the help of this channels .
9. Bancassurance model is very much required for the development of insurancesector in india as people are having trust in banks as a financial advisor.
Banks are having the large amount of database with them .
10.Bancassurance requires change in mind of employees of banks in their approach,thinking and work culture on the part of everybody .
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SUGGESTIONS
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Suggestions :-
1. Agents has to know which product will appeal to the customers ,with focusingon competitors product also . new companies are looking for the individuals
with marketing skills .
On the other hand agents are preferred because of the trust they create among
their clients. Hence agents must have to develop a goodwill as to go further.
Agents has to equipped themselves with the latest technologies as to compete
with the other channels of the industry .
New Agents must asked to have training under experienced agents so as their
way of functioning is observed and special guidance can be given .
2. Insurers must focus on direct selling as in todays scenario with no time tospend on buying insurance products from other channels there is huge scope of
this channel.
Youth and High networth individuals are more computer savvy can be directly
focussed through internet.
Insurers made this channel by giving customera user friendly interface as this
channels has potential to service customers pre, post sales querries online in a
efficient and effective manner .
3. Brokers must provide customer need based products .
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CONCLUSION
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CONCLUSION :-
The insurance distribution is undergoing a transformation that may finally
lead to significant changes in how consumers purchase insurance products .The company that survives is one who sticks to its strategy ,adjusting it when
required and constantly innovating its offering and reach to suit the customer
changing requirement .
Better channel management is likely to improve channel performance in the
long run .it therefore makes sense to look at well balanced ,alternate channels
,bancassurance,teleassurance,shopassurance etc.
The relationship between the fast moving people and technology is
empowering the next generation .
Its the distributor who makes the differences in terms of after sales and claim
settlement .
Insurers need to be aware of the risk in the structuring of their distribution
through alternate channels because ultimately ,they dont control the acces to
the customer. Insurers need to positioned with multi-channel stragies and
products to capitalize on the opportunities.
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BIBLIOGRAPHY
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Bibliography .:
1. http://www.ey.com/IN/en/Industries/Financial-Services/Insurance/Indias-insurance-industry-issues-and-challenges
2. http://www.slideshare.net/deepapremk/insurance-distribution-system3. http://www.ey.com/Publication/vwLUAssets/Insurance_industry_-
_challenges_reforms_and_realignment/$FILE/EY-Insurance-industry-challenges-reforms-
realignment.pdf
4. https://www.genevaassociation.org/media/238894/ga2002_gp27%283%29_benoist.pdf
5. http://connection.ebscohost.com/c/articles/87005074/driving-microinsurance-through-bancassurance6. http://www.cifplearning.com/Insurance%20distribution%20models%20of%20the%20future.pdf
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