Rebating in Insurance - Boon or Bane

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Case Details:

Case Code : INS033
Case Length : 03 Pages
Period : 2003
Pub Date : 2003
Teaching Note : Available
Organization : Varied
Industry : Insurance
Countries : India

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Hafty Life Insurance Company has been recently established in India. One day, Shiv Das (Das), the general manager of the company called a meeting of the marketing managers of all the branches.

When all the managers had assembled in the conference hall, Das addressed them: "Good morning, everybody! The purpose of this meeting is to discuss about the erring behavior of our agents.

I have learnt that many of our agents are paying the full or partial amount of the policy premium of the first quarter on behalf of our policyholders. This is an illegal practice which puts our corporate agents and marketing channels at a disadvantage.

We have recently entered into partnership with some banks to sell our products. They have said that, if our agents continue to give rebates, they would not be able to sell our products at their counters. We have also tied up with some brokers and corporate agents. Soon, they will start complaining too. So, we seem to have no other choice, but to abandon this system."

One of the managers, Subroto Banerjee (Banerjee) said, "But this mode is used by a majority of the agents to sell products. How can we abandon this system? Doing so would definitely result in a drop in sales. This system has been in existence even before the liberalization of insurance sector."...

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.