chapter 12 insurance marketing. overview introduction to industry marketing mix (8 p’s) 1.product...
TRANSCRIPT
Chapter 12
Insurance Marketing
Overview• Introduction to Industry• Marketing Mix (8 P’s)
1. Product (Product levels & Service Flower)2. Price3. Place (Channels of Distribution)4. Promotion5. People (Employees & Customers i.e. market
segmentation)6. Physical Evidence7. Process (Service Blueprint)8. Productivity & Quality (Service Quality
Dimensions / RATER Analysis)
Overview
• SWOT Analysis
• PEST Analysis
• Recent Developments
• University Questions
Introduction to Insurance Industry• The Indian insurance industry, ever since it came into
existence, has been dominated by the public sector i.e. LIC & GIC
• In 2000, the government decided to liberalise the sector and allowed foreign equity participation of upto 49%
• Insurance Regulatory Authority (IRA) – a statutory body was established to regulate the market and promote a healthy market sector.
• IRA’s role comprises following 3 functions.– To protect the consumers interest– To ensure financial soundness and solvency of the insurance industry– To ensure healthy growth of the insurance sector.
Insurance – the concept• Contract between the insurer and the insured
under which the insurer undertakes to compensate the insured for the losses arising from the risk insured against.
• The insured agrees to pay a premium regularly.
• The person whose risk is insured is called “Insured” or “Assured”. The person who agrees to compensate called the “Insures” or “Assures” or “Underwriter”
Marketing Mix of InsuranceIndustry
Product• Product Mix
Product• Product Levels
Product• Service Flower
CORE: PROVIDE INSURANCE POLICIES
Information
Consultation
Order taking
Hospitality
Exception
Safe Keeping
Billing
Payment
SUPPLEMENTARY SERVICES
Price• In an insurance business, the pricing decisions are
concerned with:– The premium charged against the policies, – Interest charged for defaulting the payment of premium
and credit facilities– Commission charged for underwriting and consultancy
services• For general insurance (Auto) the premium depends on– Make of the vehicle– Year of manufacture– Place of registration– Current showroom price of the vehicle
Price• For life insurance the premium depends on three
factors– Costs: Fixed percentage of insurer’s office expenses,
salaries, computers, and maintenance of buildings, commissions to be paid to the agents
– Mortality: Mortality tables allow the insurer to calculate the average chance of someone dying within one year
– Interest: The insurance firm receives interest on the premium payment, from the time of policy taken, up to the maturity/death. When the period is longer , the effects on interest income is more
• Discounts may be offered for existing clients renewing the policy
Place - Channels of distribution
Promotion
People
Market Segmentation (External Customers)[Univ Q – Nov 02, 05, 08 & May 08(5 marks); May 04 & 07(10 marks)]
Market Segmentation(External Customers)
Physical Evidence[Univ Q – Nov 07(5 marks)]
Process (Service Blueprint)
• Customer friendly
• Speed and accuracy of payment is of great importance
• Installment schemes should be streamlined to cater to the ever growing demands of the consumers
Process (Service Blueprint)
Productivity & Quality(Service Quality Dimensions/RATER Analysis)
SWOT Analysis
PEST Analysis
Recent Developments• Dozen private players• Rising awareness levels• Innovative products• Increased penetration• Customer-focused service and professional
advice • Integral part of financial planning kit v/s tax
saving tool• Number of distribution channels• Multiple touch points
Environmental factors affecting the Insurance Industry
[Univ Q - May 06(10 marks)]
• Economic development• Growing consumer awareness• Education• Increasing Longevity• Declining Interest Rates• IRDA• Liberalisation & privatisation of insurance
Privatization of Insurance [Univ Q – Nov 04(10 marks)]
• Insurance has always been a politically sensitive subject in India.• Within less than 10 years of independence, the Indian government
nationalized private insurance companies in 1956 to bring this vital sector under government control to raise much needed development funds.
• Since then, state-owned insurance companies have grown Inefficient and have been criticized for their huge bureaucracies, but still have millions of policy holders.
• Any attempt to even suggest letting private players into this vital sector has met with resistance and agitation from the powerful insurance employees unions.
• However, today this sector has been opened to the private sector• The bigger private players claim that opening up insurance will give policy
holders better products and service• The opponents of privatization argue that in a poor country like India
insurance needs to have social objectives and newcomers will not have that commitment.
• Many international players are eyeing the vast potential of the Indian market and are already making plans to come in.
University Questions• How do you segment insurance? Nov 02, 05, 08(5
marks); May 04 & 07(10 marks)]
• Physical evidence in insurance sector. Nov 07(5 marks)]
• Insurance is no more public sector monopoly in India. Comment. [Nov 04(10 marks)]
• Define Insurance. Explain the environmental factors affecting the insurance industry. [May 06(10 marks)]
• Discuss consumer decision – making process for purchasing buying a life insurance product. [Nov 06(10 marks)]