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

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Reaching out to the bank's existing customers would be very easy for the insurance companies as the banks already had a well-established relationship with their customers. Since SBI had a network of over 9,000 branches, SBI stood to gain a lot by utilizing the bancassurance channel. It was reported that by the end of 2001, 21 branches of SBI were distributing SBI-Cardiff's group policies. Many analysts believed that bancassurance would play a very important role in India because banks were familiar with the target customers' needs, had a strong service delivery mechanism, good quality administration, complete integration of insurance and bank products and services, qualified personnel and an organized tracking system for reporting on agents' time and the results of bank referrals. However, it was also pointed out that the partnership between insurers and banks could run into problems. The most common problems that partners could face were inefficient manpower management, lack of sales culture within the bank, lack of branch personnel's involvement, insufficient product promotions, failure in integrating marketing plans of both bank and insurance company, limited database expertise of the bank and inadequate incentives to the bank personnel involved in sales of insurance products.

Despite the growing thrust on bancassurance, most of the players believed that individual agents would continue to play a major role in the Indian insurance industry. According to Anuroop Singh, CEO, Max New York Life, the new distribution channels would not be able to completely replace individual agents. He said, "Over 90% of the life insurance schemes the world over are sold through individual agents. Agents will be the primary channel of distribution in India and so we have invested substantially in training our life insurance agent advisers here." Max New York worked towards making the quality of its agents its main differentiating factor. The company adopted the career agent system instead of LIC's general agent system. Max New York paid attention to the agent selection process so as to recruit the best talent available. The selection process comprised four stages - screening, psychometric tests, career seminars and final interview. Agents were trained in the various products the company offered and the insurance needs of the customers so that they were in a position to offer them sound advise. The training covered 152-hours, instead of the mandatory 100 hours stipulated by IRDA. The program involved modules on understanding the consumer psyche and the financial market, and developing selling skills and the right attitude. Commenting on the need for training agents, Mr. Debashis Sarkar, senior vice president, marketing, Max New York, said, "Internal employees are all opinion shapers and indirect brand-builders and brand promise needs to be replicated down the chain at every customer touch point." The company also made training an ongoing process, and ensured that the training program addressed the needs of agents through development of skills and knowledge through a program spreading over 500 hours over two years.

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