distribution in the insurance industry

8/8/2019 Distribution in the Insurance Industry

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Presented By:

Nimisha Walecha (E13)

Priyanka Sharma (B23)

Saurabh Tiwari (C57)

Ankush Dureja (C 34)


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INSURANCE

Insurance is a complex product

representing a promise tocompensate the insured or the

third party according to some

specified terms and conditions

,if some well defined contingent

event occurs.


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Distribution Channels in Insurance

Insurers market various insurance covers either directly or through variousdistribution channelsindividual agents, corporate agents (includingBancassurance) and Brokers.

Life insurance products are sold through individual agents and many ofthem have this as their only career occupation.

General insurance products are sold through individual agents, corporateagents and brokers.


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Distribution channels such as agents are licensed by theIRDA.

To get an agency license, one has to have certainminimum qualifications; practical training in insurancesubjects and pass an examination conducted by theInsurance Institute ofIndia.

IRDA regulations on licensing of agents/brokers lay downthe code of conduct for individual agents, corporateagents and brokers.


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One of the issues that is of great concern affectingprofessionalism in insurance activities is resorting rebating byintermediaries.

Rebating is prohibited as per Section 41 of the Insurance Act,1938 and the public are advised not to deal withintermediaries offering rebate of any kind.

Public are advised not to ask for any prohibited rebates in

premium since commission payment to an agent is the onlyincome for some to take care of their families.

Similarly, agents are also advised not to indulge in suchpractices which could cause them loss of agency income.


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ROLE OF DISTRIBUTION CHANNELS

IN INSURANCE COMPANIESy Distributors account for the largest element of the insurers

cost and impact the profitability.

y

Distribution capability influences the product design ininsurance.

y They play an important role in sourcing client feedback which

goes a long way in new product development according to

changing needs of customers.

y Distribution channel has direct impact on the insurers market

image.

y Integration of distribution channel is key concern of the

regulatory mechanism.


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ICICILOMBARDChannels1. The company follows multi-channel

approach to tap customers.

2. Depending on the effectiveness, thefollowing channels are used for sales,service and other allied activities.

3. The main objective of these channels is :

To create value beyond the product.

To convert customer to clients.

To spread awareness about thecompany and its products.


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RETAILPhysical

Sales force, agents and brokers are the driving force behind the companys business.

They are the point of contact with the end customer and share the companys vision of bringing

innovative insurance solutions to customers' doorsteps.

Direct: The companys sales force -- sales executives and sales officers form the companysbackbone and are the most powerful assets behind our growth.

Indirect

-- Brokers:I

nsurance broking plays a vital role in distribution of insurance solutions. Through thischannel, we plan to reach out to a wider customer base to increase our market share.Customers look forward to insurance brokers for expert advice on customized insurancesolutions.

-- Agents: Agents are the face of the company and are critical to companys growth. The companyhas individual and corporate as its agent.


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O

NLI

NEICICI Lombard has developed a web-based system to meet all the pre- and post-policytransaction and MIS needs of its customers. The online initiative supports online policysales, which is directly linked to our payment gateway server for online payments.

The main features of Online Insurance are:

y Do It Yourself architecture

y Fast, convenient and easy

y Buy / renew policies

y 24\7 access to all your policy details

y Regular premium renewal reminders

y Single view of all insurance policies held by an ndividual

y Online Manager: A tool to manage your entire insurance portfolio

y Instant issuance of digitally signed policies

y Most advanced technology and state-of-the art infrastructure

y Online claim intimation and status-tracking


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BANCASSURANCEBancassurance channel has been successfullydeployed internationally to distribute insurance

products. ICICI Lombard is the only company witha dedicated bancasurance distribution channelservicing over 50 locations through a dedicatedteam of product managers, sales managers and

sales executives.


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TELESALESy Telesales channel is being used effectivelyby ICICI Lombard to sell, cross sell and up-sell various products and services tocustomers.

y It is specially suited to shorten sales cycle,increase revenues and profitability.

y The channel taps customers through directsales, institutional and relationship sales,transactional sales, segment/account

specific targeted sales, event-basedactivities, ongoing communication to buildtrust and generate repeat purchase and tele-servicing.

The main role of tele sales is :

As leads routers

As leads convertor

As service support to

Agency and other Sales Force.


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Life Insurance Corporation

Of

India


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y LIC is the largest Life insurance company in India fully

owned by the government ofIndia.

yIt also funds close to 24.6% of the Indian Government'sexpenses.

y It has assets estimated of 9.31 trillion (US$211.34

billion).

y It was founded in 1956 with the merger of more than 200insurance companies and provident societies


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DISTRIBUTION CHANNELSy AGENTS

LIC had a large network of 8 lakh agents for distributing itsproducts.

The company had several marketing personnel designated as'DevelopmentOfficers' in each branch.

These development officers, in turn, employed and trained anumber of agents, and receivedincentives for the business generated by these agents, in additionto their regular salaries.

o CARRIER AGENTS Rural Carrier agents

City Carrier agents


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y BANCASSUARANCE

Currently LIC has 39 banks as bancassurancepartners, including 9 nationalized banks.

Eg. PNB, Axis Bank, Central Bank etc.

y CORPORATE TIE UPS

LIC has tie up with 150 corporate agents for

expansion of its business.

Eg. Help Age India ,Nomura


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y BROKERS

LIC has around 125 licenced brokers to distribute its products. Eg. Netambit

NetAmbit, which has an insurance broking licence, willdistribute LIC products through offices in 140 locations across

the country.

Plans are afoot to increase the presence of NetAmbit to 250locations across the country by end March 2011. NetAmbit willalso sell insurance products of other private life insurers.


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y DIRECT SALES EXECUTIVES

y They are used frequently used by the companyy It ensures there is no mis-selling.

y The trust level increases on the part of the client.

Progress of low cost distribution channels is in evidence in India

The business generated from direct selling increased to 4.76% from1.63% in the same period.

ONLINE

e-Proposal has been started

But still need an agent to check the physical condition and healthof the clients.


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COMPARISON OF THE CHANNELS


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CHANNEL EVOLUTIONSTAGE

PRODUCTCOMPLEXITY

CHALLENGES

ADVISOR/AGENT

Mature Depending on theability can sellfrom most easy todifficult product.

There is noaccountability tocheck mis- sellingby them.

BANCASSURANCE Growing Simple, Low costproducts.

Bank changepartners everyyear

WEALTHMANAGEMENT

Emerging The whole range with details onpros and cons

They may shift toinsurers payingmore.

FINANCIALPLANNERS

Emerging All products fromall partnerinsurers

They may shift toinsurers payingmore.


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CHANNEL EVOLUTIONSTAGE

PRODUCTCOMPLEXITY

CHALLENGES

INSURANCEBROKERS

Emerging All product fromall partnerinsurers.

Yes to find takersamong buyersbecause of theirlow key.

WEBSITES Emerging All product fromall partnerinsurers

Have to updateevery new productto be a relevantreferral point.

TELEMARKETING Growing Targeted product

for this channel.

Conversion rates

are low.


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BUSINESS PERFORMANCE


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INDIVIDUAL NEW BUSINESS PERFORMANCE OF LIFE INSURERS FOR 2008-09:

CHANNELWISE

(in per cent)

INSURER INDIVIDUALAGENTS

CORPORATE

Banks

AGENTS

Others

BROKERS DIRECTSELLING

PRIVATE 54.94 20.78 10.92 2.00 11.37

LIC 97.34 97.34 0.49 0.47 0.2

*Source : IRDA Annual report 2008-2009


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GROUP NEW BUSINESS PERFORMANCE OF LIFE INSURERS FOR 2008-09

CHANNELWISE(in per cent)

INSURER INDIVIDUALAGENTS

CORPORATE

Banks

AGENTS

Others

BROKERS DIRECTSELLING

PRIVATE 0.32 9.19 0.83 1.75 87.91

LIC 12.11 1.13 0.72 0.02 86.02

Source : IRDA Annual report 2008-2009


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THANK YOU

distribution in the insurance industry

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