Distribution Channels in Life Insurance

20 q Bimaquest - Vol. VIII Issue I, January 2008

Distribution Channels in Life Insurance

Distribution channel is the life blood of insurance business. Insurance distribution is strewnwith opportunities and challenges .To make most of the opportunities in growing market likeIndia we have to overcome challenges while encashing opportunities.

Traditional distribution channel of agency still rules the roost in life insurance in India. Alternatedistribution channels which came up after the opening up of the sector six years back havehuge potential which needs to be tapped. The graph below is indicative of the influence ofalternative channel in life insurance distribution.

Figure 1: Comparison between Business done through agency and alternate distributionchannel in life insurance industry in India in 2005-06

DISTRIBUTION CHANNELS IN LIFE INSURANCENeha Singhvi & Prachi Bhatt

MBA StudentsNIASoM, Pune

Bimaquest - Vol. VIII Issue I, January 2008 q 21


Source: IRDA Annual Report 2005-06

Why there is need for alternate distribution channels?

l To increase insurance penetration in the country.

l To differentiate on basis of customer service. To retain and attract new customers soas to expand business

l To increase insurance awareness and knowledge among people.

l To satisfy the needs of more demanding customers.

l To improve cost efficiency in insurance distribution.

What determines choice of distribution channel for an insurance company?

l Where are the customers?

l What is target customer profile?

l Which product (linked, traditional, term etc.) can be sold through distribution channel?

l Which channel provides best buying experience and value to target customer segment?

The customer preferences vary by market segment like geography, age, income, life styleetc, and market characteristics change over time.

NEW BUSINESS (LIFE) UNDERWRITTEN THROUGHVARIOUS INTERMEDIARIES: 2005-06

Individidual Corporate Agents Brokers Referral (Per cent)Agents Banks Others Direct

BusinessPrivate Sector 59.71 16.87 8.92 0.83 7.06 6.61LIC 98.37 1.25 0.32 0.06 0.00 0.00TOTAL 85.67 6.38 3.15 0.31 2.32 2.17



TIED AGENCY

For decades, agency was the only distribution channel for life insurance in India. Even todayalmost 80% of business is carried through agency channel. This channel has various merits:-

l Through agency, personal contact and relationship can be established with the customer.Agents usually enjoy personal credibility with customers.

l Agents provide various presales and post sales services to customers.

l It involves no capital investment

l This channel’s awareness and acceptability is maximum among people

l Cross selling is possible through this channel

l Due to personal contact, it can provide valuable feedback about the need and expectationof consumers.

But, it has few drawbacks like high attrition rate. Due to this, initial investment done ontraining and educating the agents goes waste. Attrition causes the problem of servicing orphanpolicies. Agents are generally not tech savvy.

SWOT Analysis of Tied Agency

Source: Paper on distribution channel by Datamonitor,1999

Strengths Weakness

l Greater relationship and more l Higher cost for insurer and consumerface to face contact because of higher commission rates

l Consumers are used to the channell Not as convenient as other channels

l Experience and greater knowledge l Old fashioned channel, not fullyof industry updated with latest technologies

l Cross selling Ability



At present, the number of agents working in life insurance industry is approximately 15Lacsbut a majority of them are dormant which leads to poor activity ratio. The massive agencyforce is a pragmatic example of 80-20 rule. What is need of the hour is not the quantity butthe quality. Having some productive and lots of unproductive lot drags down the morale of thecommunity of agents, leads to discontent within the profession and the respect for theprofession is downgraded. Over manning has its cost to the company in terms of unrecoveredor under recovered training cost. Also, opportunity cost in terms of a more productive agentserving in place of a dormant agent can’t be looked over. Over manning also contributes tomis-selling and rebating

Adequate concept, product and soft skill training is sine quo non for professionalizing agencyforce. IRDA mandates companies to impart 100 hour training to its agents and today most ofthe companies have in-house training facility. But number of agents attending subsequentproduct trainings at the time of product launches and other soft skill training sessions getsreduced substantially. It leads to poor knowledge about company’s whole basket of offeringsand agents selling only a few products instead of doing a true need-based selling to customers.The concern of the regulator towards growing proportion of linked products in companies’total percentage of business can also be attributed to biasedness of training programs in favorof linked products. Training becomes all the more important in today’s competitive environmentwhere the agent is not only selling insurance but the company providing insurance. Adequateand quality initial training at the time of licensing is like laying a strong foundation for agentsentering the industry and subsequent trainings are like sharpening the agents’ saw to staycompetitive.

Agents are off-roll employees of an insurance company and keeping them motivated is a bigchallenge. Companies run loyalty and engagement programs (like club membership) andsales incentive programs (like short term contests) providing various monetary and non-monetary benefits. They serve well to motivate the agents to perform better, increase interactionof agents with the companies, promote spirit of healthy competition among the agents and to

Opportunity Threats

l Focus High net worth individuals l Alternative distribution channelswho prefer relationship over price

l Integrate alternative channels intotheir strategy

l Embrace technology



recognize good performing agents, provided these programs are easily comprehendible,transparent and quick in benefit disbursal and grievance redressal and adequate knowledgeabout the programs is given to agents.

This profession is also not left untouched by Information Technology. Most of the companieshave a dedicated agent’s portal but the number of agents accessing them is less thansatisfactory. One step forward in making the agents more efficient and professional is tomake them more tech-savvy through training and other means.

Looking at the regulatory front, a dispute redressal mechanism for the agents should beestablished by the IRDA. Also Sec 48A should be revised allowing agents to be representedin the Board of Directors of the insurers.

Insurance selling is a tough job. Agents are facing razor sharp competition from other alternativedistribution channels and with so many insurance players in the fray, their job has become allthe more difficult. Though the image of an agent has undergone lot of change since the timeit was first introduced but still agents face a lot of sales resistance. Insurance companiesneed to consciously endeavor into dedicated efforts for the image makeover of their agentswhich will go much beyond calling them advisors, financial service consultants instead ofagents. Agents are the true Brand Ambassadors of the company and they deserve a fairtreatment from the insurers.

Inspite of multitude of other distribution channels coming up, tied agency is here to stay. Whatis needed is a genuine effort in recruitment, training and development of a good agency forcecritical for growth and survival, knowing fully well that for a long-term business like insurance,quality, productivity and ethical values must be ingrained fully in the workforce.

INDEPENDENT AGENTS

The presence of professional insurance brokers and independent financial advisors, whorepresents the interest of the client, is a major motivating factor for insurance to raise efficiencyand to give better value to policyholders.

CORPORATE AGENTS

In order to spread awareness about insurance and to increase the coverage of a large sectionof population who have remained outside the radius of insurance coverage all these years,the IRDA introduced a variety of intermediaries as “distribution” is key to insurance penetration.The Corporate Agent is a concept introduced with a view to taking advantage of the presenceof a large number of firms, corporations, banks, NGOs, cooperative societies and panchayats



who are in contact with people in normal discharge of their activities and utilize their presenceand services for canvassing the sale of insurance contracts.

Corporate Agents (CAs) are corporate entities (NBFCs) that source policies for the InsuranceCompany with whom they have a tie-up. They are authorized to source policies for oneinsurance company only. The difference between CA and Bancassurance arrangement isthat the former trains its own employees to sell the policies while in case of Bancassurancearrangement, the employees of the insurance company (FSCs) source the business.

Criteria to become a corporate agent: As the insurance contracts are highly technical innature, the regulations issued by the IRDA stipulated that canvassing should be done only by“specified persons” engaged by the Corporate Agents and such specified persons shouldhave the qualification prescribed by the authority. In case of corporate executives also, theIRDA has prescribed certain qualifications to obtain a license.

In other words, in order to become a corporate agent, the corporate agency should have thepeople who posses qualification as prescribed by the IRDA and also the persons working forthe particular agency should have a legal license which would enable them to act as solicitoror the procurer on behalf of the agency. One more condition is that license should be issuedby a competent authority.

The decision to engage any person as a Corporate Agent will be taken only in the corporateoffice of the Insurance company and proceedings appointing the ‘Person’ as Corporate Agentwill be issued by an officer who will specially be designated by the Chief Executive Officerto issue such orders. The officer so designated shall maintain a list of corporate agentsappointed by the company and will be responsible for ensuring that the corporate agentscomply with the regulations and the circulars and instructions issued by the authority fromtime to time. The officer will also communicate to the IRDA the updated list of corporateagents engaged by the insurer on half yearly basis. In this communication, the officer shouldspecially highlight the cancellation of licenses, if any and give brief reasons leading to thecancellation.

Potential corporate agents can be:-

l Institutions having high customer base in rural regions – Micro Insurance – Highcustomer base to be exploited in this segment, eg. ITC, etc.

l NGOs



l Relatively new and untapped NBFCs like Religare, etc.

l Retailers

Implementing corporate agency: Key challenges in the Indian context

l Creating an environment of top level involvement of NBFCs management.

l Bringing relevance, motivation and skill development at the operating level at CAsbranches.

l Resolving possible conflicts of interest between the CA and the insurer.

l Setting up distribution procedures consistent with the manual systems in the CA.

l Establishing credible service level agreements between the CA and the insurer.

BANCASSURANCE

Bancassurance channel was introduced in India when insurance industry was opened up forprivate players. Bancassurance is not just selling insurance products to bank customer butexploits the true synergies and respective strength of bank and insurer.

There are three types of models for bancassurance:

1. Corporate agency

Bank acts as corporate agent without risk participation. Enters into service levelagreement

2. Referral arrangement

Referral is not permitted to banks acting as agents, it is used for sharing bank database,providing physical infrastructure and displaying of publicity material.

3. Joint venture between bank and insurance company



In India, a bank can tie up with one general insurance and one life insurance Company asmandated by regulation.

Bancassurance is a win-win situation for the insurance company and the bank

Benefits to Bank

Banks are key pillars in of financial system with considerable share in total financial assets ofhouseholds in form of deposits

l Banks have large network spread across the length and breath of the country. Total ofabout 65700 branches of commercial banks serving an average 15000 people. Socustomers can be reached extensively.

l Banks have good brand awareness within their geographical region which provides fora lower per lead cost.

l Source of revenue diversification for fee based income in scenario of tightening interestmargins

l Opportunity to provide wider range of services to clients to increase retention, meetexpectations

l Leverage on their huge customer base.

l Reduction in risk based capital requirement

l Optimum utilization of infrastructure and resources.

Benefits to Insurance Company

l Channel diversification

l Reduced acquisition cost

l Increase volume of business and improved geographical reach.

l Benefit from substantial data base of bank



l By collaborating with bank can develop new financial product.

l Known customer therefore risk assessment is easier

Benefits for Consumers

l Greater convenience by meeting all financial needs under one roof, universal banking

l Reduced distribution cost will lead to reduced premiums.

l Provide easy accessibility.

l Double Assurance/credibility

l Convenience in payment

l Easy and automatic renewal

The products that are likely to sell through bancassurance are simple vanilla products.Delivery Approaches of Bancassurance

Source: The Journal of III, July-Dec 2004

Bancassurance is many distribution channels in itself. What banks need is to build and excelin multiple distribution channels to profitably meet the requirements of its varied clientele.

2.5 Delivery Approaches of Bancassurance

Delivery Aprroach Product Salary/ Face- Part/ Single/sold Commn to-face Full Time Multiple Insurer

Carreer Agents Complex Commn. Yes Full/Part time Single

Special Advisors Complex Salary Yes Full time Single

Salaried agents Complex Salary Yes Full time Single

Bank employees Simple Incentives Yes Part time Single

Set up/ acquisition of Complex Owned Yes Full time Multipleagencies or brokerageterms

Direct response Simple Owned No Full time Single

Internet Simple Owned No Full time Single

E-Brokerage Simple Commn. No Full time Multiple



Bancassurance fallout is driven by various factors like:

1. Competitive clash between bank and insurer’s parent bank in core banking businessresulting in bank holding bank sensitive customer information.

2. Change in management of bank

3. Lack of openness and trust between the bank and the insurer.

4. No jointly agreed business plan.

5. Business processes not integrated.

Key Success Factors for Bancassurance

l Cultural Integration- the two partners may have different organizational cultures andphilosophies. The mission and vision might also differ. These issues need to be addressed.

l Communication- there should be a proper communication of the process and the benefitsof the partnership to the front end/branch level people so that they feel part of theentire system.

l Technological incompatibility- technological incompatibility between the insurer andthe banker might lead to non-delivery of promised service standards.

l MIS Reporting- MIS reporting should be simple and easy to understand and the flowof reports should be as per service agreements.

l Proper training of Bank Staff- The bank staff should be properly trained so that theycan do proper need based selling to the customers.

l Right Products and clearly defined roles and responsibilities.

POTENTIAL OF RETAIL CHANNEL IN LIFE INSURANCE

Organized retail makes up for over 70 to 80 % of the total business in developed countries.The Indian organized retail segment pales in comparison even with other Asian countriessuch as China, South Korea, Thailand etc.



The Indian retail market is the most fragmented in the world, with just 2-3% of entire retailbusiness carried out with organized sector, according to CRISIL report.

FORECAST ABOUT RETAIL SECTOR

Figure 3: Forecast about retail sector

Source: Enam securities.

Source: Economic Times Survey

0 50

100 150 200 250 300

In Billions$

FY05 FY08E

ESTIMATED GROWTH OF RETAIL SECTOR

Retail sales

Organized Retail sales

ORGANISED RETAILERS' STORE LOCATIONS

Tier 2 c ities

Met ro & Tier 1c ities



Organized retail will form 10% of total retailing by end of this decade. In meantime, theorganized sector will grow at rate of around 30% per annum.

Insurance product can be pushed through organized retail sector. Although, at present,organized retail channel is 3% of total retail business but with huge growth rate of retailsector it can become viable distribution channel for life insurance products. Brand identity,trust and understanding associated with retailers may make customers more receptive tobeing sold insurance through retail channel.

UK experience shows retailer can become significant players in insurance distribution. Retailerlike Tesco, Sainbury and ASDA are among largest distributor of insurance product. Retailercan act as corporate agent or as referral.

Allocation of distribution function between retailer and insurer

1. Marketing: Retailer markets policies through in-store money market counters

2. Sales: Policies are available at money market counter in shop rite stores not activelysold.

3. Policy Administration: All policies administration handled by the insurer.

4. Premium Collection: Retailer collects premium on cash basis at in-store money marketcounters.

5. Claim Administration: Client has to lodge claim directly through the insurer.

6. Claim Payments: Insurer is responsible for claim payments.

(source: Genesis)

This channel can be integrated to agency channel for better servicing and for establishingone-to-one relationship with customer. Insurance company has to undergo restructuring toalign itself with retail distribution channel.

BROKERS

The broker acts as an intermediary between the companies and insurers and representsinsurance buyer. Insurance brokers differ from agents who represent the insurance carrier



and not the client. There are three types of licensing for brokers-Direct (life and non-life andexcluding reinsurance), Composite (direct and reinsurance) and Reinsurance.

This channel is new experience for the life insurance customer accustomed to brokers inother financial services, real estate, and travel and tourism. Internationally, insurance brokersfocus on corporate and non-life insurance business, leaving the retail and life business toagents. However, brokers in India had to cater to both the retail and life business, because ofvirtual stagnation in the non-life sector prior to detariffing .Brokers account for about15 per cent of non-life premium at present.

Percentage of new business written by brokers in life insurance for the year 2005-06 is just31% which is indicative of the minimal presence of this channel in life insurance distribution.

Major drawback in Indian insurance broking is low channel awareness and unevenly spreadof broking activity. Majority of brokers are based in western zone (around 78) and northernzone ( around 79). There is no licensed broker representation hailing from states of Goa,Madhya Pradesh, Jammu and Kashmir, Haryana, Uttranchal, Bihar, Jarkhand etc.

Reasons for this are as follows:-

l Large amount of minimum paid up capital.

l Lack of entrepreneurship of locals.

l Inadequate availability of insurance potential.

l Proximity of metros to few states.

l Co-broker and sub-broker arrangement are not allowed.

l Building faith in mind of client and building personal credibility.

Insurance brokers are demanding a cut in the minimum capital requirement for getting licenseand permission to have co-brokers and sub-brokers.

The IRDA had set up an expert committee in July 06 to address brokers related issues, hasbeen receiving representation from Insurance Brokers Association of India(IBAI) but no



aspect of Life insurance was touched upon by this expert committee report.

FINANCIAL PLANNER AND ADVISOR

Before 1990s, the direct sales force of life insurance constituted a major distribution channelin United Kingdom. With the emergence of Polarization rules in U.K. that is, selection betweentied to one company or being independent to handle all products across the market, gave birthto Independent Financial Advisors (IFA). IFAs are qualified persons or institution who canprovide advice on financial products.

Today, IFA show their significant presence as distribution channel. Around 45% of life insuranceand 85% of pension business is done by IFA in UK. In India, with growth of upper and uppermiddle class and with the increase in life expectancy of people, the need for financial planningfor proper management of personal finance.

Most of us deem financial planning as either tax, insurance or investment planning, which isnot true. Financial planning integrates all aspect of our personal finance. For example, buyinghome, children marriage and education, vacations, debt management etc. IFA assemblesdifferent financial products in accordance to customer needs and provide value added productby creating customized financial product.

In India, number of financial advisors and planners are growing, benefits of selling insuranceproduct through financial planner are as follows:

l Complex product can be sold through this channel.

l They have experience in selling financial product.

l Expert knowledge will lead to need-based selling and a pull strategy rather than a pushstrategy in selling insurance products.

l Customer has faith and trust on financial advisor as new customer is introduced toadvisor from existing customer, accountants or other experts.

l IFA matches product with customer needs. Therefore lapsation ratio would be minimumin this channel.

WORK-SITE MARKETING



Worksite marketing is the process of distributing individual or group insurance products topeople at their place of work on a voluntary, payroll-deduction basis. Under a worksitemarketing arrangement, an insurer approaches an employer about offering its employees theopportunity to buy insurance coverage at work.

If the employer agrees to the offering, the insurer’s sales representative then markets theproducts directly to the employees at the worksite. The employer implements a payrolldeduction plan to withhold employees’ premium payments from their paychecks and thensubmits the premium payments to the insurance company.

This area needs to be tapped, as in any country one of the biggest markets is through theworksite. With changes in human resources management polices and compensation packages,group products or work-site products do have a definite market that cannot be ignored.

The advantages of worksite marketing:-

l Captive customer base

l Potential to sell individual insurance and group insurance

l Potential to sell individual insurance and group insurance

l High hit ratio for intermediaries

l Usually employees perceive this as a facility provided to them by the employer fortheir welfare and this creates goodwill.

l High persistency.

This channel of distribution is beneficial to employer, employees and life insurer. One possiblereason for insufficient development of this channel in India is that employers generally expectsome kind of incentive to provide the facilities to the life insurers for making presentationsand making arrangements for deduction of premium from salaries.

The challenges would be the cost effectiveness, product customization and efficient postsales servicing, which would determine continued business. Technology has a key role to playin worksite marketing to ensure cost benefits. Banks and financial institutions have beensuccessfully marketing credit cards and other financial products using this channel. If not anidentical model, a similar approach can be used for selling insurance.



INTERNET

Insurance company are already using internet for direct marketing and providing service totheir client, but portal for brokers are not developed. Website of insurance company has toinclude various other services. While deciding to implement a new technology, major factorsconsidered are scalability and user adaptability

Internet can provide online insurance market place. For example, Launched in October 1999,kanetix is Canada’s, national, online insurance marketplace. The kanetix insurance informationand shopping service brings consumers and insurance companies together in a one-stopshopping environment. Each day, thousands of consumers visit the kanetix website to compareinsurance quotes from a variety of Canadian insurance companies. Users can select theinsurance quote of their choice and choose to complete the application for coverage online orpurchase their policy over the phone.

In addition to the insurance marketplace, kanetix is the leading provider of online insurancequotation technology and develops online quotation systems and websites for some of Canada’sleading insurance providers.

In India, we have PREMIA IBX enables insurance brokers, companies and customers tointeract in real time with one another on the same software interface through the web. Itfeatures 3 ‘trading windows’ - one each for insurance brokers, customers and companies.An additional IBAI window allows brokers to communicate with IBAI, submit reports andexchange relevant information. The pay-per-use software is available through monthly /quarterly user-based subscription. While it provides individual web sites for each broker, itpromises instant comparative analysis of quotes, unlimited exposure to all types of clienteleacross India and huge savings in software procurement and maintenance. It is backed by 24-hour servicing by 3i InfoTech.

But internet is ill suited at providing the level or type of insurance and support that mostconsumers are seeking with purchase of insurance only 12% of companies sells insuranceonline. In India internet penetration is still low legality of agreements are posing difficultproblem. If contract concluded through internet has to be free and fair. Consumer must haveasses to all information relating to product or service. Policy needs to be fairly standardizedmore specialized and less costly considering nature of channel.

DISTRIBUTION CHANNEL FOR MICRO INSURANCE

Rural sector is a huge untapped market for insurance. There are about 124 million rural



households. It has been accepted that micro-insurance is a key service in the financial needspackage of people at bottom of the pyramid. There is an enormous demand for social protectionamong India’s poor,

Possible distribution channels for micro insurance distribution:

l NGOs, MFIs, SHG: According to IRDA regulations a new class of agents NGOs,MFIs, SHG of repute can now be used as micro insurance agents. Insurance companyunderwrites the risk and these civil service organizations handle distribution as theformer has economies of scale and later has good grassroots network. This arrangementhelps in keeping the cost of insurance low which is attractive for the poor and profitablefor company.

l Micro agent: Insurance company can also appoint various micro agents. Regulator hasreduced the training requirement to 25 hours.

l Cooperative Banks and RRBs: There is a large network of cooperative banks andregional rural banks which can be used as a distribution channel.

l Post Offices

l E-Bima

l Internet kiosks

l Mobile Vans

Infrastructure: a van, a simuter with a printer, video audio facility.

Human resource: one driver and two to three sales cum administrative staff agent.

Site mode of operation: moves from village to village.

Role: awareness programs, relationship building and management, business acquisition, policyservicing and business retention through premium collection activity. It can also provide serviceto other channels for policy servicing, policy query handling, complaint handling, assistance inclaim handling etc.



Coverage through various institutions in rural areas:-

Source: FORTE study

Channel’s effectiveness can be evaluated on the following criterion:

l Reach

l Influence on target segment. Trust and reliability

l Understanding of insurance

l Business acquisition capability

l Support requirement

l Financial transaction handling

l Operational discipline

l Customer servicing

Name of the institution/ Accessibility/ coverage of Rural presence/ penetrationinstrument each branch

Regional Rural Bank 15-20 villages 5000+ pop size village

Commercial bank 5000 account holders(Rural Branch) spread over (35-40 villages) 5000+ pop size village

Post office 5-6 villages 2000+ pop size village

Cooperative society 10,000 members spread 5000+ pop size villageover 20-25 villages

*ITC E choupal 5 to 7 villages Prosperous village

District cooperative 7500 accounts Block head quarterbank

Kissan Credit Card 12% of total no. of Farmer of any villagefarmers in rural area



There is insufficient data on consumption and saving pattern of rural India which proves animpediment in insurance needs. Micro insurance’s success will depend on achieving a criticalmass. Customized product should be designed to meet rural people’s localized issues andproblems. Simplicity necessary to increase not only customer comfort level but also of fieldadvisors.

Awareness creation about insurance is important for success of rural insurance. It can bedone through awareness campaigns and workshops for sewaks, patwaris, teachers, panchayatmembers. Literates can be reached through pamphlets, posters, wall painting, and hoardings.Illiterates can be reached through gram sabhas, street plays and folk songs, radio, television.Glitch in claim settlement often gives negative publicity and very often turns the entire villageand surrounding villages against insurance. Rural should be adequately informed death claimsprocedure. Product literature, proposal forms and policy contracts should be provided invernacular language. People in rural area buy insurance acting heavily on faith. Sarpanchs,gram pradhans having considerable influence can be used as agents.

Micro insurance success depends if all stakeholders take part in awareness building, efficientdelivery mechanism and product development.

CHALLENGES FOR DISTRIBUTION CHANNELS

l Investment has to be made on education, training and establishment of a distributionchannel. This investment has to be recovered.

l Insurance knowledge is complex. It is responsibility of distribution channel to developexpertise and to provide customer with insurance knowledge. Channel member shouldbe in a position to advise the prospect as to what is the best choice for him in the givencircumstance. They need to have comprehensive knowledge about the life cycle stagesof an individual.

l How efficiently channel is able to perform the role of the primary underwriter is a bigquestion mark.

l Unintentionally or intentionally in some cases the channel members are forced to sellproducts that are best suited and beneficial to channel rather than the proposer. Theyare more target oriented than customer oriented.

l Mis-selling is very common in insurance industry. This occurs when, perhaps, to earna much higher commission rate. For example agents do not assess the needs of thecustomer properly while recommending products. Sometimes agents or advisors



misrepresent facts by promising unrealistic returns to customers, or even provide incorrectinformation on product features. As a result, the customer is unhappy and saddled witha product that does not meet either his immediate or future needs. Rebating has beenan unfortunate practice in every variety of financial products in India. It is illegal toshare the commission with the clients, but the fine is just Rs 500. The average lapseratio for the insurance industry is about 25% which is an indicator of mis-selling.

l Channel may focus more on acquisition rather than retention. According to a study, itcosts about five times more to attract a new customer than to retain an existing one.The institutional agents might not keep follow up.

l Insurance companies have to align itself according to different channels.

REFERENCES

l K.C. Mishra and Smita Mishra, - Game Is Changing Insurance Reloaded, 2006

l H.Chaturvedi, Dharmendra Kumar and Rahul Singh, - India Insurance Report

l Graig Churchill, - Protecting the Poor- A Microinsurance Compendium, 2006

l James Roth and Vijay Athere, - CGAP working group on micro insurance. Goodand bad practices. Case studies no 14

l Vijay Chavan, - Channeling the future

l Kaori Zeniya, -Dynamism in reform in financial product distribution channels inUnited Kingdom

l Mr. Douglas Summer, -Bancassurance – Not Quite a Done Deal

l Corrine Legrand, - New trends in world Bancassurance, 2004

l K Nitya Kalyani, -A wholesome profession , IRDA Journal Jan 2005

l Bancassurance:Emerging trends, opportunities and challenges- Sigma , No 5/2007

l IRDA Annual Report 2005-06



l The Journal of III July – Dec 2004

PPT/PRESENTATIONS

l R.Krishnamurthy, - “Bancassurance in Insurance Distribution: Key Issues in the Indian context”, FICCI Seminar, New Delhi, October 15, 2001

l V Vishwanand, –“Custom Built Partnership”.

l Stuart Purdy, -“Bancassurance- a suitable Model for India”

l Rajender P Chitale,- “Distribution Pluralism”, FICCI Sixth International Confer-ence on Insurance.

l Graham Moris, –“Bancassurance in Indian environment”

l Joy deep K Roy, -“ Changing scenario of distribution channel”

l N Joshi, -“Rural insurance scenario–a research based presentation”, FIICI 9th

conference on insurance, 19th Oct, 2004.

l R V Ranjan,-“ Emerging Communication Platforms in Rural India”

WEBSITES

www.irdaindia.org

www.milliman.com

www.swissr.com

www.iii.org

www.iis.org

www.ibai.org

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Distribution Channels in Life Insurance

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