Life Insurance Marketing in India (B) The Changing Distribution Norms

Distribution Initiatives of the New Players Contd...

Many other major private insurers were laying emphasis on the recruitment and development of quality agents to enhance their brand image in the market and attract customers. LIC ran an advertisement campaign that featured one of its most successful agents to highlight its belief in the individual agent system. Meanwhile, the Government of India opened up yet another avenue for distributing insurance products in August 2002: brokers (Refer Exhibit II). Foreign brokerage firms were also allowed, but only through a tie-up with an Indian partner and a 26% cap on equity. IRDA planned to finalize regulations by September 2002 and issue licenses to four categories of brokers - direct general insurance broker, direct life insurance broker, reinsurance broker, composite broker, and insurance consultant (Refer Exhibit III).

What Lies Ahead

After the decision to allow brokerage firms was announced, many Indian and foreign firms expressed their interest in entering the Indian insurance market. HSBC Bank announced its intention to set up an insurance brokerage firm in India.

The Tatas also planned to enter the insurance brokerage business, focusing on both corporate and retail clients (reportedly through a strategic partnership with the Hong Kong based Jardine Matheson group).

As marketing, distribution and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in the future, the new players seemed to have a good chance.

With the growing popularity of new distribution channels in the Indian insurance market, Private insurers hoped to effectively leverage the strengths of the new distribution channels. The above belief was strengthened by the emergence of another new channel – the Internet. According to reports, in 2001, around 12% of the insurance products were sold through the Internet, and this figure was expected to grow as Internet penetration increased.

Because of increasing competition in a crowded market, private insurers were trying to leverage every possible medium. According to analysts, in the not-too-distant future, even departmental stores, ATMs, Internet kiosks and supermarkets would be selling insurance.

Exhibits

Exhibit I: Distribution Channels in Life Insurance
Exhibit II: Insurance Regulatory and Development Authority (Insurance Brokers and Insurance Consultants) Regulations, 2002
Exhibit III: Categories of Brokers

Case Details

Case Code : MKTG027
Themes: Distribution
Case Length : 10 Pages
Period : 2000-2002
Organization : ICICI Prudential, Max New York Life, ETC
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Insurance

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