Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

Product Innovations

The new, private insurers focused on providing customized products – products that contain innovative features – to the customers. It was observed that in the Indian market, only endowment and money back policies were popular among consumers. Private insurers came up with need-based insurance policies such as whole life policies, term insurance policies as well – products designed according to needs of the customer. In so far as the premium is concerned, the pure risk protection products introduced by some new private insurers had no facility for savings, and hence, their premiums were very low, as compared to money back and endowment policies. In cases where LIC offered policies at relatively low premiums, private insurers were expected to score over LIC because of the additional benefits offered by their policies for a marginally higher premium. Analysts pointed out the affluent and busy customers would prefer policies offered by private insurers to avoid LIC's 'tardy and cumbersome' procedures.

Though private insurers were trying to strengthen their presence in the market and increase brand awareness with large-scale multi media promotional campaigns, the real test awaited them in the area of distribution. The companies had realized this and, as a result, conducted extensive market research to figure out what type of products would appeal to customers.

Max New York reportedly spent eight months conducting exhaustive market research, and according to company sources, its policies were developed on the basis of the results of this research. One of the innovations of Max New York was that it added life insurance to credit risk insurance, whereby individuals could get their housing/vehicle loans insured.

Thus, if a person failed to repay the loan amount because of a certain disability or death, the asset would not be impounded, because the bank or the institution would pick up the life insurance amount instead. Max New York Life also introduced new endowment policies – children endowment at the age of 18, 24 and 60. According to company sources, two new riders were added to these policies – the payor benefit rider and 5-year term renewable and convertible rider. Payor benefit allows child's coverage to continue even in the case payor was disabled.

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Case Details

Case Code : MKTG028
Themes: Pricing
Case Length : 14 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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