Innovative Channels For Non-Life Insurance Marketing In India

Source : ezinearticles dot com
By Mrinmoy Bhattacharjee

During the last decade, several new and innovative channels have evolved for marketing Insurance products across the world apart from the usual practice of selling through Insurance agents and India is no exception. As a matter of fact, there are three main channels of Insurance selling, namely Direct channels (Agents, telesales etc.), Indirect channels (bundled with product, bundled with other financial services) and Partner channels (Bancassurance, corporates etc.) Partner channels like Bancassurance is a very popular practice in Latin American and European countries where almost 70-80% of their total Insurance businesses are being generated by these kinds of channels. In India also there has been a good inclination towards the alternate channels of insurance selling adopted by the other countries in the world which could bring a remarkable growth in urban Insurance market in the country.

Indian insurance industry is going through a great boom now with more and more foreign insurance companies tying up with Indian banks to sell insurance in the country. The private insurance companies are giving a tough fight to the public sector companies like LIC and GIC (with its four subsidiaries). Private Companies are developing more and more innovative channels to penetrate the market and public sector companies are losing their growth in market share. Though in terms of product innovativeness, public sector companies are not lagging behind, still the increase in the market share of these companies are not at par with the total industry's market share.

One of the feasible options for new marketing channel for the public sector insurance companies may be, is to have a Joint Venture with public sector telecom companies like Bharat Sanchar Nigam Limited (BSNL) to sell their non-life insurance policies, where the premiums are low and can be clubbed with the rentals of the phone bills. An illustration is given below:

A personal Mediclaim policy of 50,000 in National insurance company along with service tax of 12.24% will cost around Rs. 800 and a rental of a mobile phone may be taken as Rs. 399/month. Now, if this is collected in four quarterly premium, then the customer has to pay an excess amount of Rs. 200 during any four months of a year and the total phone bill during those months may be Rs. 599, which a customer would not mind to pay knowing that he/she is covered with a medical insurance policy of Rs. 50,000.

If we put our eye balls accross the the trends of Indian insurance industry, it becomes quite transparent that most of the companies are trying to leverage the equity of their already established businesses to the new insurance business, for example Bharti-AXA, Bajaj-Allianz, Reliance, TATA-AIG etc. are doing nothing but, capitalizing their equity form their respective parent business to the new insurance business.

Similarly, the banks like ICICI, HDFC, SBI are also trying to use their established credibility from banking into insurance.

Public sector telecom companies like BSNL, MTNL etc. are having the largest customer base in the country, even in the rural market and its a known fact that the rural people save one third of their income on an average, irrespective of their earning level.

So a joint venture would probably put both the parties in a win-win situation in the business.