Marketing Financial Products
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Chapter 7 : Non-Life Insurance
Product Range in Non-life Insurance
Retail Products in Non-life Insurance
Corporate Products in Non-life Insurance
Product Planning and Development
New Product Development
Customization
Pricing of Non-life Insurance Products
Life Insurance vs. Non-life Insurance
Factors Affecting the Pricing of Non-life Products
Pricing Objectives
Promotional Mix
Advertising
Distribution
Designing a Distribution System
Distribution Channels
The Current Scenario
Joint Ventures
Detariffing
Chapter Summary
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The common non-life insurance products targeted at
individual (retail) customers are motor vehicle insurance, personal accident
insurance, health insurance, and householder’s insurance. Other retail products
include baggage insurance, travel insurance, transit insurance, and pet
insurance. The common non-life insurance products targeted at corporate
(organizational) customers are group health insurance, cargo insurance and hull
insurance, industrial insurance, and fire insurance. Other non-life insurance
products include the shopkeeper’s policy, fidelity insurance, jeweler’s block
insurance, liability insurance, cattle insurance, poultry insurance, aquaculture
insurance, farmer’s package, weather insurance, and patent insurance. With the
deregulation of the sector and increasing competition, most private players are
looking at new product development as a strategic imperative. Successful product
development needs both a well-developed and clearly defined internal process and
a receptive external environment. The private players have attempted to
customize their offerings in order to attract customers. The basic product is
made more suitable by adding riders. Riders are the extensions or the add-ons
provided on a particular product for which the customer pays extra premium. |
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In life insurance, the main factors used for determining the premium rates
are mortality, expenses, and rate of interest. The factors considered when
pricing non-life insurance products are claims cost, business acquisition
cost, management expenses, margin for fluctuations in claims experience, and
a reasonable profit. The factors affecting the pricing structure are broadly
divided into portfolio level, case level, and other factors. The objectives
that must be kept in mind when pricing insurance products are adequacy,
reasonableness, fairness, and consistency & flexibility.
The promotional mix in the non-life insurance industry is primarily centered
on advertising. Two of the most common advertising appeals used by non-life
insurance marketers are fear and humor. IRDA has taken steps to protect the
interests of the consumer through the ‘Insurance Advertising and Disclosure
Act’ of 2000. The Act requires that insurance marketers adhere to the code
of conduct in the disclosure of information.
Non-life insurance marketers use multiple distribution channels to reach
their target customers. The traditional channels include direct mail and
direct sales force, insurance agents, brokers, and agencies. The
contemporary channels of distribution include call centers; tie-ups with
corporate agents, NGOs, automobile distributors, etc.; worksite marketing;
and bancassurance.
The foreign players have been more successful in joint ventures in India, as
compared to their experience in other Asian markets. Till December 2006,
IRDA stipulated the limits of fixing premiums for various non-life insurance
products. Detariffing has been implemented from January 2007 (except in
third party liability cover for motor vehicles), with significant
implications for the use of pricing strategy as an important component of
the overall marketing strategy.
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