Page 232 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 13: Insurance Industry: India

Marketing Strategies Notes

Also, with more players in the market, there will be significant increase in advertising, brand
building, and this will benefit whole lot of ancillary industries.
A substantial shift is likely to take place in the distribution of insurance in India. Many of these
changes will echo international trends. Worldwide, insurance products move along a continuum
from pure service products to pure commodity products. Initially, insurance is seen as a complex
product with a high advice and service component. Buyers prefer a face-to-face interaction and
place a high premium on brand names and reliability.

As products become simpler and awareness increases, they become off-the-shelf, commodity
products. Sellers move to remote channels such as the telephone or direct mail. Various
intermediaries, not necessarily insurance companies, sell insurance. In some countries like
Netherlands and Japan, insurance is marketed using the Post Office’s distribution channels. At
this point, buyers look for low price. Brand loyalty could shift from the insurer to the seller.

Bancassurance

In other markets, notably Europe, this has resulted in bank assurance: banks entering the insurance
business. The Netherlands led with financial services firms providing an entire range of products
including bank accounts, motor, home and life insurance, and pensions. Other European markets
have followed suit. In France, over half of all life insurance sales are made through banks. In the
UK, almost 95% of banks and building societies are distributing insurance products today.
In India too, banks hope to maximize expensive existing networks by selling a range of products.
Many bankers have shown an inclination to enter the insurance market by leveraging their
strengths in the areas of brand image, distribution network, face to face contact with the clients
and telemarketing coupled with advanced information technology systems. Insurers in India
should also explore distribution through non-financial organisations.

Example: Insurance for consumer items such as refrigerators can be offered at the point
of sale.

Information Technology

Worldwide interest in E-commerce and India’s predominant position in Information Technology
and software development are also likely to be major factors in the marketing of insurance
products in the immediate future. The number of internet accounts is increasing and the trend
has already been set by some of the leading insurers and insurance brokers worldwide.

Task Prepare a presentation on the various opportunities available in insurance sector
today.

13.3.2 Challenges

You will agree that if one has opportunities, one has to face challenges; it is like two sides of the
same coin. No doubt India has a lot of opportunities coming her way, but there are a few
challenges and threats as well.
The four main challenges facing the industry are product innovation, distribution, customer
service, and investments. Unit-linked personal insurance products might find greater acceptability

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