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Instead of selling the same insurance products across various distribution channels, insurance companies are mulling offering their products exclusively in one channel for the benefit of a particular set of customers.
Bajaj Allianz Life Insurance, for instance, plans to launch a long-term health plan to be sold only by the agency channel. “Earlier, we used to have the same products across customer segments and channels. What we are trying to do now is prepare products for specific needs of the customer segment and the channel. This will make them more competitive,” said Anuj Agarwal, managing director and chief executive officer.
Currently, insurance policies in the life insurance sector are distributed through corporate-agency banks or brokers, individual agents, and direct or online channels to the customers.
According to experts, the current system often leads to a lot of confusion. Because, in the case of complex insurance products, prospective customers might not be able to understand the intricacies if sold through a particular channel such as agents.
“If it is a unit-linked product with capital guarantee and other features, an agent who may not be a qualified professional, might not be able to explain it effectively. Hence, it is prudent that specific products are sold through specific channels,” said the chief distribution officer of a private life insurance company.
The online channel already has specific products for the segment. However, insurance industry executives said the channel had also seen a change with respect to the product proposition and sale.
Pankaj Razdan, CEO and managing director of Birla Sun Life Insurance, said, while only term insurance was earlier being sold through the channel and was considered the most suitable, now other protection non-term products in the life insurance space have also been launched via this channel.
Apart from pure-term products, unit-linked plans (Ulips) are also sold through this channel. Ulips, once the darling of agents, have fallen out of favour with agents after the commissions were restricted.
Aegon Religare Life Insurance, for instance, started the online channel with term insurance, evolved the product, and included new covers such as terminal illness benefit covers. Later, it also came up with online Ulips, health products and fixed benefit products. At the end of December 2013, the insurer introduced savings-cum-insurance products.
Motor insurance has been widely sold in the non-life market as well and renewed through the online channel, while health insurance in some cases is also catching up. The senior executive of a private general insurance company with a bank partner said it is now looking to sell personal accident policies primarily through the bank channel, where the customer base is readily available and can be offered at attractive prices.
“While this product might be available on other channels, bank-partners and their employees would become the primary distributors of these products in the near future. This is where the industry is heading, since we have research to support the fact that some products like personal accident have better sales rates in bank channel,” the executive quoted above added.
Rural and micro-insurance will also see products being exclusively sold through one channel. Given that there are very few micro agents available in the market to sell insurance in smaller towns owing to the low ticket size and poor remuneration, insurance companies are now tying up with regional rural banks and cooperative banks for the same.
Munish Sharda, managing director and CEO of Future Generali India Life Insurance, said his company is looking for tie-ups with more banks in the rural market as well as with large banks, whenever opportunities open for distribution.
Common Services Centres (CSCs) is a model proposed by Insurance Regulatory and Development Authority (Irda) to sell products in rural and semi-urban areas. The regulator has also put in certain criteria in place to tie-up with the 100,000 CSCs across India wherein standardised products will be offered through this channel, so that it is easier for the customer to comprehend and easier for Village Level Entrepreneurs in-charge of the CSCs to sell them.
