Marketing Financial Products


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Marketing Financial Products Textbook | Courseware

Non-Life Insurance - Chapter 7

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. 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.

Chapter 7 : Overview

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

Pricing of Non-life Insurance Products
Life Insurance vs. Non-life Insurance
Factors Affecting the Pricing of Non-life Products
Pricing Objectives

Promotional Mix

Designing a Distribution System
Distribution Channels

The Current Scenario
Joint Ventures