CONTEMPORARY ISSUES IN MARKETING OF LIFE INSURANCE SERVICES IN INDIA
INTRODUCTION
In India, the construction of economical evolution has undergone a considerable alter inward the last
decade amongst the service sector becoming a major component of the economic scheme contributing to to a greater extent than than
60% of existent gross domestic product inward the concluding v years (RBI, 2010; IMF, 2010). Growth inward the services sector has
been noun in addition to has resulted inward the emergence of a novel breed of larger to a greater extent than sophisticated
service companies. Services encompass a broad gamut of activities similar trading, banking & finance,
infotainment, existent estate, transportation, security, direction & technical consultancy among
several others (Riddle, 1986).
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Contribution of diverse sectors of services to our economic scheme had been increasing for the last
decade. Banking in addition to insurance services contribute the major chunk of fiscal services inward India.
The insurance manufacture provides the impetus to attain the economical goals of social safety and
welfare. Social safety is an essential requirement of social judge (Dreze in addition to Sen, 1996).
Share of the insurance fund to the existent gross domestic product has been showing a tendency of growth for the concluding five
years viz. from 2.2% inward 2004–05 to 2.8% inward 2008–09. It is expected that contribution of life
insurance live expected to live considerably increasing inward the time to come amongst enhancing degree of
insurance penetration in addition to awareness amidst the full general populace most the demand of insurance.
Privatisation has brought inward novel players inward the marketplace amongst almost all having unusual partners.
For the concluding i decade of this liberalized era, Indian life insurance manufacture has been witnessing
tremendous changes amongst private players having reasonable growth charge per unit of measurement in addition to marketplace share. The
emerging scenario provides the customers amongst selection of insurance, wider arrive at of novel and
innovative products, competitive pricing of products in addition to services.
Insurance delineate concern falls nether the ambit of services in addition to is widely used every bit a method of risk
transfer. Services are benefits, which are sold to customers or clients such every bit hospitality,
transport, in addition to education. Service is an activity or do goodness that i political party tin offering to some other that
is essentially intangible in addition to does non resultant inward the ownership of anything. Its production may or
may non live tied to a physical production (Kotler in addition to Bloom, 1984; Kotler, 2000). Insurance tin be
considered every bit a production evidenced past times the policy document in addition to every bit a service inward terms of the
benefits (services) rendered past times the insurance companies in addition to their intermediaries.
Marketing of life insurance service is critical in addition to complex compared to non-life insurance for
diverse obvious reasons that include fourth dimension span, periodicity in addition to potentiality of claims in addition to higher
create switching costs affecting the buying behaviour. In the nowadays scenario, insurance
companies are facing job of transiting from a perceived selling activity to a structuredstrategic
marketing activity. Our endeavour inward this newspaper is to demonstrate the whole gamut of life
insurance marketing activity from a services perspective in addition to to highlight the contemporary
issues in addition to challenges facing the life insurance companies inward production marketing. We nowadays the
major problems concerning the work of diverse distribution channels inward the life insurance industry,
which the insurers should address to optimise on the distribution efforts.
INSURANCE SERVICES MARKETING
Marketing, every bit the term is commonly understood today, was developed initially inward connection
amongst the selling of consumer–packaged goods in addition to afterward amongst the selling of industrial goods. The
Committee on Definitions of the American Marketing Association (AMA) defined marketing as
the performance of delineate concern activities that direct the flow of goods in addition to services to the consumer
(Alexander, 1960). The characteristics of services are the justification for the claim that services
marketing is dissimilar to marketing physical products. (Van Looy, Gemmel in addition to Van Dierdonck,
2003; Zeithaml in addition to Bitner, 2003; Fisk, Grove in addition to John, 2004). Many of the developments in
services marketing are fairly recent. The factors affecting the developments inside services
marketing are organisation size in addition to structure, regulatory bodies, growth inward service industries,
characteristics of services, customer/employee interaction, in addition to specific service sectors. Services
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marketing are the physical care for of researching in addition to promoting to a marketplace amongst non–physical goods
known every bit services.
Insurance marketing is basically merely the marketing of insurance products. Insurance marketing
emphasizes the importance of the client preferences in addition to priorities. Major objectives of life
insurance marketing are increasing client awareness, successful distribution of insurance
products, developing corporate image, improving client service, improving client base
in addition to its spread, in addition to etc. Factors impeding the application of insurance marketing are insufficient
sense of insurers piece expanding insurance business, non-existence of long-term
evolution strategies of insurance companies in addition to the fact that insurers orient mostly to short
term needs; in addition to piece trying to apply to a greater extent than actively insurance marketing agency it is necessary to
alter the whole organizational direction construction of an insurance company, the channels of
insurance products sales, technologies of communication amongst clients, in addition to etc.
Insurer has to analyse the nature of the customer‘s needs in addition to programme their products in addition to services in
such a way that they tin give satisfaction to the customers in addition to confront the competitors. Planning
needs analysis of the insurance marketplace to have got a decision, prediction, in addition to forecasting every bit to future
needs of customers. All these programs involve a number of functions (7Ps), which are to be
planned carefully. The combination of these functions is known every bit insurance service marketing
mix.
Marketing mix is the planned packet of elements, which volition back upward the organisation in
reaching its target markets in addition to specific objectives. The marketing mix has its rootage inward marketing
of goods for consumer markets in addition to consists of the well–known 4Ps: Price, Promotion, Place, and
Product. Numerous modifications to the 4Ps have got been proposed, the most concerted criticism
came from the services marketing area.
Borden (1965) was the starting fourth dimension i to conceive the ideas of marketing mix, but did non formally
define the marketing mix (Bennett, 1997). He explained it every bit of import elements or ingredients
that makeup a marketing program. Borden‘s master copy marketing mix had a set of 12 elements:
production planning, pricing, branding, channels of distribution, personal selling, advertising,
promotions, packaging, display, servicing, physical handling, in addition to fact finding in addition to analysis.
Lazer in addition to Kelly (1962) in addition to Lazer, Culley in addition to Staudt (1973) suggested iii elements of
marketing mix: the goods in addition to services mix, the distribution mix, in addition to the communication mix.
McCarthy (1978) regrouped Borden‘s 12 elements into 4 elements in addition to was the starting fourth dimension who
offered the marketing mix, which is also known every bit the 4 Ps. He defined the marketing mix as
a combination of all of the factors at marketing manager‘s ascendence to satisfy the target market.
This marketing mix approach has been criticized for beingness incomplete, because it does non bear
inward heed services marketing. Booms in addition to Bitner (1981) create 7Ps past times adding Participants, Physical
Evidence, in addition to Process to the master copy 4Ps. Their creation aims to include service inward the marketing
mix, in addition to hence the additional Ps are called ―Service Ps‖. The marketing mix amongst the vii Ps is
highly appropriate towards businesses that offering services (Zeithaml in addition to Bitner, 2003). The 7Ps of
marketing mix have got been studied past times some researchers inward marketing fields (Low in addition to Tan, 1995;
Pheng in addition to Ming, 1997; Melewar in addition to Saunders, 2000). Still, the expanded marketing mix
suggested past times Booms in addition to Bitner (1981) has been considered to live a valuable tool for marketing
service. These vii Ps are the suitable marketing mix elements for life insurance services.
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LIFE INSURANCE MARKETING MIX
PRODUCT: Influenza A virus subtype H5N1 production is anything that tin live offered to a marketplace to satisfy a demand or want. The
products, which tin live marketed, include physical goods, services, persons, places,
organizations, in addition to ideas. In the deeper sense, the production is non a physical item but a perception
of the consumer or the user. LaLonde (1977) found production related criteria to live most important,
followed past times distribution, price, in addition to promotion. According to Woodruffe (1995), the product
chemical element of the marketing mix refers to how the offering is position together–typically this volition include
aspects relating to quality, styling, colour, design, create name, packaging sizes, in addition to other
features. Influenza A virus subtype H5N1 service production is anything–either inward isolation or inward combination–that an organisation
offers to potential customers to satisfy their needs. The service production constitutes the foundation
of an organisation‘s existence (Kandampully, 2002). Life insurance companies offering different
insurance products amongst dissimilar features to cater dissimilar needs of the customers. By agency of
buying a life insurance product, a client buys the hope offered because he believes inward the
hope beingness made past times the insurance company. Life insurance companies have got several products
such every bit term assurance, endowment assurance, coin dorsum policies, pension plans. There are
also grouping insurance schemes than tin live taken past times employer for their employees. Nowadays,
investment plans (ULIPs) are really pop inward the market. These insurance products are always
readily marketable.
PRICE: Price is the hateful of setting the central value betwixt 2 parties. Price, inward marketing
mix terms, covers all aspects of pricing such every bit discount pricing, extended credit, listing price, and
payment menstruum (Woodruffe, 1995). Kandampully (2002) describes ―Pricing inward service
organizations is less influenced past times cost, but to a greater extent than past times customer‘s perceptions of quality,
satisfaction, in addition to value. The actual pricing of a service is thus oftentimes determined past times matching the
customer‘s perception of value‖. With this pricing method, pricing is considered every bit a marketing
mix variable, thereby considered together amongst the other marketing mix variables earlier a
marketing programme is position together (Nagle in addition to Holden, 2002). Zeithaml in addition to Bitner (2003) defines
iii basic marketing cost strategies which service companies tin attend, the strategies are
competition–based, cost–based, in addition to demand–based pricing strategies. Pricing inward life insurance is
somewhat complex every bit compared to the pricing strategies of other fiscal products. The price
(premium) for a life insurance production is determined past times expected claim costs, investment
income, administrative costs, in addition to fair turn a profit loading (Harrington in addition to Niehaus, 2004). The claims
cost is based on the mortality charge per unit of measurement realized on dissimilar historic menstruum groups. The Actuary on
considerations that depend on the sense of the insurer inward the past times in addition to his assessment of the
trends inward the time to come decides the premium rates. Pricing inward today‘s insurance delineate concern environment
requires actuaries to live knowledgeable inward an ever-expanding grouping of issues because of the
nature of diversified products. In illustration of life insurance, in that location is express compass to work cost every bit a
strategic weapon.
PLACE: Place is some other of import chemical element of marketing mix. Place refers to the location where
the production or service is available to the customer, including distribution channels. Place
contributes an of import factor inward the marketing of services (Bitner, 1990). Black (2002) found
that customers sometimes work the same products through dissimilar channel. In illustration of life
insurance, it is a combination of decisions regarding channels of distribution. The emerging new
chance for life insurance companies towards integration of the fiscal services manufacture is
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bancassurance (Aggarwal, 2004). Bancassurance prospects inward Republic of Republic of India are actually brilliant because
huge banking infrastructure across urban, semi–urban in addition to rural Republic of Republic of India (Neelamegam in addition to Veni,
2008) in addition to life insurers are using this channel (Shukla, 2006). New distributors similar stockbrokers,
fiscal planners, full general agents, in addition to fiscal institutions etc. involve lower distribution costs,
variable every bit opposed to fixed expenses, lower front–end committee costs, in addition to the chance of
selling the products inward conjunction amongst other investment–related products (Chandler, 1994).
Strategy of worksite marketing is to a greater extent than useful inward illustration of marketing of pension in addition to wellness plans.
The widespread diffusion of the Internet has created an explosion inward the growth of electronic
channels, including direct channels (that is, private fellowship spider web sites), electronic markets, or
electronic intermediaries over which multiple buyers in addition to sellers do delineate concern (Malone, Yates, and
Benjamin, 1987), in addition to other cybermediaries (Sarkar, Butler, in addition to Steinfield, 1995). However,
consumers have got non shown a marked preference for purchasing insurance production via the Internet
(Trembly, 2001). The traditional scheme of ―agents‖ is the dominating i inward Republic of Republic of India in addition to this will
proceed to live a major distribution channel for insurers, since this scheme has marrow roots inward rural
sector.
PROMOTION: The ‗promotional mix‘ is a term used to depict the set of tools that a business
tin work to communicate effectively the benefits of its products or services to its customers.
Market communication performs iii basic roles inward marketing–to inform, to persuade, in addition to to
remind. Traditional advertisement employs a diversity of methods–including advertising, sales
promotion, populace relation, in addition to personal selling–to attract the attending of existing in addition to potential
customers, in addition to to inform them of the products, services, in addition to special offers made available past times the
theatre (Peattie, in addition to Peattie, 1994). Each of the categories of advertisement mix has straightaway become
familiar inward many areas of services marketing. In illustration of life insurance services, advertisement is
done through a mix of advertising, personal selling, in addition to sales promotion. Promotion
communicates amongst the potential marketplace in addition to so every bit to persuade the prospective customers to seek a new
insurance production (Periasamy, 2005). Online advertising is i marketing tool that is worth the
money. As the Internet takes on to a greater extent than might in addition to influence all of the time, having a spider web presence
volition position an insurance fellowship on the cyber map in addition to larn it noticed. Block delineate advertising in
merchandise journals, manufacture publications in addition to periodicals is the way to go. Television ads in addition to print
ads are fantabulous forms of insurance marketing. All life insurance companies have got started using
PR tools to create amend picture most them inward the minds of full general public. Personal selling is
extremely labour intensive but is the best shape every bit far every bit insurance is concerned, dealing amongst one
client at a time.
PEOPLE: People, process, in addition to physical evidence are the iii ―Ps‖, which are especially
applicable to services marketing mix (Booms in addition to Bitner, 1981). These iii elements are highly
interrelated amongst each other. People are the principal critical resources inward whatsoever organisation,
peculiarly service organisation. Because of the simultaneity of production in addition to consumption in
services, the service staff occupies the key seat inward influencing customer‘s perceptions of
service quality. Woodruffe (1995) only uses service personnel inward the ―People‖ component of the
services marketing mix. Recruiting the correct staff in addition to preparation them appropriately inward the delivery
of their service is essential, if the service provider wants to obtain a shape of competitive
advantage. Life insurance companies have got to give to a greater extent than attending inward preparation in addition to development
their employees in addition to agents. Building strong human relationship amongst their agents every bit good every bit the
customers volition aid inward coming together customers‘ needs in addition to serving them efficiently. Satisfaction
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depends on the nature of interaction betwixt customers in addition to the people representing insurance
companies. Training the employees in addition to agents to innovate novel products in addition to work of information
technology for efficiency both at staff in addition to agent degree are the key areas to aspect into.
PROCESS: Influenza A virus subtype H5N1 physical care for is the method in addition to sequence of actions inward the service performance. Unlike
goods, services are processes. Services are the destination results of deeds, acts, performances, and
activities performed past times the firm‘s employees lone or inward conjunction amongst diverse equipments,
machinery, facilities, in addition to and so on. In assessing process, customers evaluate whether the service
follows a production–line approach or whether the physical care for is a customized i inward which the
client is given personalized attending (Bowen in addition to Lawler, 1992). Shostack (1984) points out
that since services are intangible in addition to hence described inward words past times people, companies have got to
live actually clear inward defining the service process. The risks of relying on words lone inward describing
services are the oversimplification of the service, incompleteness of the description, subjectivity
of dissimilar readers in addition to the biased interpretation of the words used to depict the service
(Shostack, 1987). This physical care for involved inward life insurance manufacture should live client friendly.
The speed in addition to accuracy of payment is of vital important. The physical care for methodology of life
insurers should live such that it provides total ease in addition to convenience to the customers. Badly
designed in addition to piteous processes Pb to irksome in addition to inefficient delivery in addition to enter hard for
insurance employees in addition to agents to do their chore well. Consequently it volition resultant inward low
productivity in addition to service failures.
PHYSICAL EVIDENCE: The physical evidence is defined every bit the surroundings inward which the
service is delivered in addition to where the service provider in addition to the customers interact, in addition to whatsoever tangible
commodities that facilitate performance or communicate the service. According to Zeithaml and
Bitner (2003), to evaluate services earlier its purchase in addition to to assess their satisfaction amongst the
service after it is bought, customers tend to rely on tangible cues, or physical evidence. The
appearance of building, landscaping, interior furnishing, equipments, printed materials, in addition to other
visible cues all render tangible evidence of a firm‘s service quality. This sort of physical
evidence provides fantabulous opportunities for a service theatre to send clear in addition to consistent
marketing messages regarding the firm‘s purpose the intended marketplace segment, in addition to the nature of
the service (Bitner, 1992 in addition to 1996). In illustration of insurance business, apart from office
environment, materials such every bit brochures, policy documents, in addition to periodic statements are the
tangibles, which volition influence the customers. Insurance companies in addition to intermediaries demand to
handle all these physical evidences carefully every bit they tin have got a profound impact on the
impression of the customers. Although all insurance companies render similar essential service,
the differences that do be are the physical evidence.
ANALYSIS OF DISTRIBUTION CHANNELS
Distribution is a key determinant of success of all insurance companies. In illustration of life insurance,
it is combination of decisions regarding channels of distribution. Life insurers marketplace various
insurance covers either straight or through diverse distribution channels—individual agents,
corporate agents including bancassurance in addition to Brokers. These are by in addition to large called the traditional
channels. In today's scenario agents proceed every bit the prime number channel for insurance distribution in
Republic of Republic of India in addition to almost all the players follow this model primarily. However, amongst novel developments in
consumers‘ behaviour, evaluation of technology in addition to deregulation, novel distribution channels
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have got been developed successfully in addition to apace inward recent years. This subdivision discusses the various
insurance distribution channels in addition to the related problem.
AGENTS: All life insurance companies have got an agency-building distribution strategy under
which they recruit, train, finance, in addition to supervise their agents/advisers. For decades, agency was
the only distribution channel for life insurance inward India. Even today to a greater extent than than 70% of delineate concern is
carried through insurance agents. Through agency, personal contact in addition to human relationship tin be
established amongst the customer. The scheme of agents is a major source of both presales in addition to post
sales services to customers, since it has the direct human relationship amongst customers. Due to personal
contact, it tin render valuable feedback most the demand in addition to expectation of consumers.
However, it is nowadays considered every bit an old fashioned channel in addition to non fully updated amongst latest
technologies.
BROKERS: Insurance brokers are professionals who assess run a risk on behalf of a client, advice on
mitigation of that risk, seat the optional insurance policy structure, convey together the insured
in addition to insurers, in addition to carry out piece of work preparatory to insurance contracts. Brokers correspond the
client in addition to volition sell the products of to a greater extent than than i company. They seek to determine the best
fit for the client in addition to tin effectively address the heed block faced past times the populace most the various
companies. The scheme of brokers is by in addition to large applicable inward the illustration of life insurance for the
high-end in addition to corporate/group segment.
BANCASSURANCE: Bancassurance inward its simplest shape is the distribution of life insurance
products through a bank‘s distribution channel. Insurance companies see bancassurance every bit a tool
for increasing their marketplace penetration in addition to premium turnover. It takes diverse forms inward various
countries depending upon the demography in addition to economical in addition to legislative climate of that country.
While bancassurance has larn a success storey inward Europe, it is relatively a novel concept in
Asia. It was introduced inward Republic of Republic of India when insurance manufacture was opened upward for private players. In
India, a banking concern tin necktie upward amongst i full general insurance in addition to i life insurance Company every bit mandated
past times IRDA regulation. The banking sector inward Republic of Republic of India comprises of to a greater extent than than 67,000 branches and
around xx crores banking concern accounts. Only 8.4% (public: 22.02% in addition to private: 1.17%) of new
delineate concern have got been done through banks inward the twelvemonth 2009-10.
EXHIBIT 1: BENEFITS OF BANCASSURANCE
Benefits to Banks Benefits to Insurers Benefits to Customers
Source of revenue
diversification
Reduction of operating cost
Diversification of business
Optimum utilization of
infrastructure in addition to resources
Lesser procurement cost
Easy access of customer
base
Known client and
hence slowly risk
assessment
Low premium because of
reduced distribution cost
Convenient inward payment
Conveniently getting all
fiscal needs nether one
roof
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Customer retentivity Channel diversification
Increase inward market
penetration
Increase inward book of
business
Extensive client reach
Double assurance/credibility
Easy in addition to automatic renewal
Getting amend service
Refined character products
Exhibit 1 shows that bancassurance is a win-win province of affairs for the insurance fellowship in addition to the
bank. However, initial investment inward systems in addition to processes in addition to people preparation is considerably
more. People treatment insurance sometimes don‘t know much most the products in addition to in i trial they
create customers they are non much bothered most their client queries. Moreover, it volition be
useful for selling only surely lines of products. In india bancassurance exercise is yet to be
much popular.
INDEPENDENT FINANCIAL ADVISOR: IFAs are authorised agents of insurance
companies having tie-ups amongst to a greater extent than than i insurance company. They are qualified persons or
establishment who tin render advice on fiscal products. Independent fiscal advisors are
commissioned agents whose primary delineate concern is the sale of belongings in addition to casualty insurance for
several insurers. IFA assembles dissimilar fiscal products inward accordance to client needs and
render value added production past times creating customized fiscal product. Today, IFA demonstrate their
pregnant presence every bit distribution channel inward both life in addition to non-life insurance business.
Technically, independent fiscal advisors who sell life insurance policies unremarkably do in addition to so as
brokers.
DIRECT MARKETING: Insurers have got also resorted to direct marketing wherein insurance
companies enter touching amongst the customers without the assistance of an intermediary. Influenza A virus subtype H5N1 separate
subdivision has been set upward in addition to officers were deputed to solicit in addition to administer insurance
business. The payoff of this scheme is the reduction of cost incurred past times the agency system.
Company owned sales squad concept is straightaway employed past times a bulk of novel players in addition to has
proved to a greater extent than effectiveness inward client creation in addition to retention. However, every bit compare to the
scheme of agents, contribution of direct marketing is considerably depression in addition to it was 25.73 %
(public: 26.86% in addition to private: 23.63%) inward the twelvemonth 2009-10 (Exhibit 2).
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EXHIBIT 2: NEW BUSINESS PREMIUM OF LIFE INSURERS FOR 2009-10
CHANNEL- WISE
(FIGURES IN PER CENT)
Life Insurer Individual
Agents
Corporate
Agents
Brokers Direct
Selling
Total
Individual
New
Business
Referrals
Banks Others*
Private
Total
50.67 24.88 10.28 3.44 10.73 100 7.85
LIC# 97.75 1.64 0.52 0.09 0 100 0.18
Industry
Total
79.61 10.6 4.28 1.38 4.13 100 3.13
*Any entity other than banks but licensed every bit a corporate agent.
# Does non include its overseas novel delineate concern premium.
Source: IRDA Annual Report, 2009-10
WORKSITE MARKETING: Under this Strategy, life insurers send squad to a target grouping and
explicate the products either private or grouping products suitable to them at their house of piece of work on
a voluntary, payroll-deduction basis. The target grouping may live employees of a particular
company, educational institute or whatsoever form if organisation. Insurance companies volition live able to
sell insurance products peculiarly pension in addition to wellness plans through this channel. One possible
argue for insufficient evolution of this channel inward Republic of Republic of India is that employers by in addition to large expect
some form of incentive to render the facilities to the life insurers for making presentations and
making arrangements for deduction of premium from salaries. With changes inward human resources
direction polices in addition to compensation packages, grouping products or piece of work site products do have got a
definite marketplace that cannot live ignored.
RETAIL CHAIN: Another innovative distribution channel that could live used are the nonfinancial
organizations. The Indian retail marketplace is the most fragmented inward the ground in addition to at
present, organized retail channel is around 3% of total retail business. But the organized sector is
expected to grow at charge per unit of measurement of around 30% per annum. With this huge growth charge per unit of measurement of retail sector it
tin larn feasible distribution channel for life insurance products. In the life segment, group
creditor insurance may live the most suitable production for this channel. However, repeat delineate concern or
renewal of delineate concern cannot live assured inward this system. Scope of retail delineate concern inward life insurance is
express every bit compared to non-life insurance.
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INTERNET: Initially, insurance was seen every bit a complex production in addition to buyers preferred face-toface
interactions amongst intermediaries. Nowadays, the payoff of technology allows insurers to
increase their arrive at into the market. All insurers have got websites through which they provide
data most products in addition to services. In Republic of Republic of India Internet penetration is nevertheless depression legality of
agreements are posing hard problem. The insecurity associated amongst transactions over the net
is nevertheless an inhibiting factor. Internet has non been evolved into a agency for direct selling of
insurance inward the electrical flow scenario. In the Indian market, where insurance is sold after considerable
sentiment fifty-fifty after face-to-face selling, the selling over the net, which must live initiated past times the
client, would have got some to a greater extent than time.
DISTRIBUTION CHANNEL FOR MICRO INSURANCE: The huge untapped marketplace for
insurance is the rural in addition to social sector. Micro-insurance is defined every bit the protection of low
income households against specific perils inward central for premium payments proportionate to
the likelihood in addition to cost of the run a risk involved. It provides an chance to the insurance
companies to encounter their social responsibleness every bit good every bit secure a strong ground inward the rural
market. The active distribution channels for micro insurance inward Republic of Republic of India are NGOs, MFIs, and
SHGs (self-help groups), Micro agents, Cooperative Banks in addition to RRBs (regional rural banks),
in addition to Post Offices. The MFIs/NGOs have got been identified every bit principal delivery channels past times most of the
insurance companies. These have got a large network, catering to huge number of clients. However
most of the MFIs have got express might to physical care for the insurance claims every bit such they seek to
customize the insurance production inward society to simplify the operational physical care for involved. As far as
Formal Banks in addition to RRBs, Post Offices in addition to Internet & Rural Kiosks are concerned they have got not
developed their potential inward delivering the insurance product.
CONTEMPORARY ISSUES AND CHALLENGES
Statistics of Indian life insurance manufacture indicates that the manufacture has been showing a
tremendous growth in addition to looking forrad a prospective future. Given aggressive expansion plans
of the private players in addition to the demand to compaction the competition, the menstruum to break-even inward lifeinsurance
delineate concern has risen from what was estimated at 9-10 years to most 13-15 years now.
The industry, which is already reeling nether the pressure level of high upfront cost of a nationwide
expansion, is straightaway also facing the job of dwindling volumes every bit policy lapses are increasing
every year. The next are some of the of import Contemporary Issues inward life insurance
delineate concern for which all insurance companies have got to pay to a greater extent than attending in addition to adequate measures to
overcome.
PENSIONS PLANS: As far every bit life insurance products are concerned, pension coverage is a
major number inward Indian life insurance business. Benefits at retirement phase remains confined to
only the employees of organised sector. There is no proper pension scheme for self–
employed in addition to agricultural workers inward the unorganised sector. There is a pressing demand for
well-defined in addition to assured pension plans. Even though the insurance players are straightaway inward the
physical care for of the studying the potential of the pension market, the destination is likewise far to reach.
ALTERNATIVE CHANNELS: The novel alternative channels of distribution are yet to be
utilized inward total swing. Till now, nearly 80% insurance policies are sold through traditional
channels. Exploitation of retailing in addition to other forms of modern channels volition definitely bring
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life insurance delineate concern to novel heights. The success of marketing insurance depends on
understanding the social in addition to cultural needs of the target population, in addition to matching the market
segment amongst the suitable intermediary segment. Further, to a greater extent than all intermediaries can't sell all
lines of delineate concern profitably inward all markets. There should live clear demarcation inward the
marketing strategies of the fellowship from this perspective.
PRODUCT POSITIONING: The biggest challenge for life insurance companies is
positioning the products. In Republic of Republic of India life insurance has been seen every bit a taxation saving mechanism
rather than a tool of personal run a risk management. Now, customers have got dissimilar needs and
dissimilar types of products are available inward the market. Instead of thinking that it is selling a
product, an insurance fellowship must see its project every bit that of converting an undifferentiated
production into a differentiated product. Therefore, life insurance companies must carefully
select the ways inward which it volition distinguish itself from competitors.
CUSTOMER EDUCATION: The existing degree of awareness of the consumers for
insurance products is considerably really low, because bulk of the Indian population is
illiterate. Even the educated customers are ignorant most the diverse products of insurance.
Therefore it is necessary that all insurers should undertake extensive programme for pedagogy of
customers. The consumer organizations in addition to media tin play a really of import role inward the
pedagogy of customers.
PRODUCT LINE: Life insurance companies have got come upward out amongst innovative production lines
after the liberalisation. However, the nature of the products is a major concern every bit far every bit the
basic regulation of insurance is concerned. Life insurance companies, peculiarly private
sector, have got been growing fast on the dorsum of unmarried product–ULIP, which does non provide
run a risk encompass every bit done past times traditional policies. More than 80% delineate concern comes from only ULIPs in
the electrical flow scenario of insurance delineate concern environment. Customers require insurance
policies, which encompass multiple risks. One of the major issues inward the contemporary scenario is
the time to come of ULIPs. In these plans, run a risk encompass element is less than the investment
component. SEBI had, inward Apr 2010, banned xiv life insurance companies from selling ULIPs
on the ground that they were akin to mutual funds in addition to were launched without obtaining
registration from it. The struggle betwixt SEBI in addition to IRDA was basically on the number whether
ULIPs are investment production or insurance schemes. The spat betwixt insurance regulator
IRDA in addition to equity marketplace regulator SEBI settled inward favour of the former. ULIPs are now
governed past times a novel set of guidelines that may alter the whole ULIP story. According to the
regulator, ULIPs launching after September 1, 2010, would have got lower charges, guaranteed
returns in addition to larger insurance cover. But time to come volition admit the fate of ULIPs.
INFORMATION TECHNOLOGY: Information technology has larn an intrinsic part
of the insurance manufacture word–wide, but inward India, it has non effectively reached to the public
peculiarly inward rural sector. Majority of customers are yet to have IT–enabled services.
RURAL MARKETING: Rural in addition to social sector exploitation is a major number for life
insurance companies. Even the awareness of insurance products in addition to benefits inward this sector is
really low. Insurance has been a priority of the urban area. Now, amongst numerous companies in
life insurance industry, the rural areas are expected to live tapped every bit well. IRDA has set down
ZENITH
International Journal of Multidisciplinary Research
Vol.1 Issue 7, Nov 2011, ISSN 2231 5780
www.zenithresearch.org.in 58
split upward regulation for micro-insurance. While enabling regulations are inward house in addition to several
insurance companies are inward operations inward India, in that location is nevertheless a demand for excogitation inward products
in addition to distribution channels for ensuring penetration of micro-insurance. Design of microinsurance
products must have got the features of simplicity, availability, affordability,
accessibility in addition to flexibility. Moreover, many of the NGO in addition to MFIs have got only a few
members. While microfinance model based on micro lending tin last amongst a few clients,
the same cannot live said for insurance offers inward a micro scale, because it hampers amongst the
basic Law of Large Numbers.
CUSTOMER SERVICE: With both LIC in addition to private players inward the fray, Indian life
insurance marketplace has undergone pregnant changes recently. One of the greatest challenges
facing organizations is the ever–growing competition, the continuous increase inward customer
expectation. . In society to attain competitive payoff in addition to efficiency, organizations have got to
seek profitable ways to differentiate themselves. There are many dissimilar strategies to reach
success, but the delivery of competent service character is the vital one, especially inward this
competitive environment. It is an overwhelming answer that most of the life insurance
providers are keen on only selling their product, non on understanding the customers‘ need.
Moreover, they are also non to a greater extent than concern most the post-sales services. Since, a satisfied
client brings inward to a greater extent than customers in addition to carries out give-and-take of oral cavity publicity, life insurers
demand to seat customers‘ needs in addition to fulfil them rather than selling insurance policies to
hold their customers satisfied.
CONCLUDING REMARKS
Influenza A virus subtype H5N1 primal regulation of insurance marketing dictates that insurance products in addition to policies
must live marketed in addition to sold primarily on the basis of the demand for safety in addition to the might of the
insurance production in addition to policy to render adequate fiscal safety from fortuitous losses. The
challenge thus facing life insurance manufacture is the demand for diversification of insurance products
amend tailored in addition to suited to encounter the needs. Package products similar ULIPs that have got proven to be
inadequate run a risk covers for the insured significantly acquit upon life insurance business. This may
larn a major threat inward time to come for the growth of life insurance industry. With the abrupt growth
of private players, insurance marketing is nether tremendous pressure, sometimes involving used
to strategies detrimental to the populace interest. To quote, micro insurance inward exercise has non been
effective that is evident from the growth inward this segment vis-Ã -vis policy estimates. For micro
insurance to live successful – for the insured in addition to for the risk-bearers – many elements are
important; i.e. uncomplicated in addition to affordable insurance products reaching large numbers of people;
streamlined administration, including premium payment; a simplified claims procedures and
verifications; in addition to rapid delivery of benefits. If most of these elements are present, it tin be
possible for micro insurance schemes to larn sustainable, to perform good in addition to to provide
―real value‖ to the poor. Further more, exploration for novel channels for micro-insurance would
pave a amend way for the penetration of life insurance inward to the marrow rural sector.
Information technology is in addition to so far used every bit a mere source of production data in addition to non a real
channel of distribution. Online purchases could live made available at to the lowest degree for the purchase of
policies amongst nominal amount assured. Competitive delineate concern surroundings essentially requires that
all private in addition to populace players must modify their marketing strategies to overcome all these issues
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