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

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Case Details:

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

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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.

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Excerpts

Distribution Initiatives of The New Players

Post-liberalization, a fierce battle commenced in the Indian insurance industry for garnering market share. New insurance companies used all available channels of distribution, right from individual agents and corporate agents to bancassurance. Bancassurance soon emerged as one of the most lucrative insurance distribution channels.

According to analysts, it not only helped insurance companies increase market penetration and premium turnover, it also helped banks increase their Return on Assets (ROA -annual earnings divided by total assets). This was because, even with a constant asset base, bancassurance contributed to enhanced ROA through fee income. (Refer Table III for various bancassurance agreements).

Allianz Bajaj Life Insurance (Allianz Bajaj) planned to build a multi-channel distribution network, which included agents, corporate agents and strategic alliances with banks, Bajaj Auto network and other direct marketing initiatives.

In late 2001, it signed a Memorandum of Understanding (MOU) with Standard Chartered Bank for an exclusive bancassurance distribution agreement. According to reports, Standard Chartered was to act as the corporate agent for the company, and the partnership was expected to leverage the bank's 60 branches across the country...

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)...

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