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  • 1. Financial Intermediaries in Non-Life Insurance FICCI October 16, 2001
  • 2. Current Industry Scenario
    • Low business and territorial penetration levels - need for new distribution channels
    • Poor marketing strategies, lack of innovation in designing & pricing the product - New products and better packaging
    • Low service standards - Need for improved customer service
    • Poor Risk Management Practices - Prudent underwriting practices in line with international standards.
    • Intermediaries to play a key role in fulfilling the above needs.
  • 3. HR Seminar
    • WHY AM I HERE ?
    • The success of the Insurance business depends on the role played by the intermediaries.
      • In the Indian context -role of intermediaries in :
        • Life insurance business for procurement and servicing.
        • General Insurance business - presently for servicing e.g. settlement of claims
        • New Insurance Companies are getting organised - ability of the company to develop a complete network of robust intermediaries is key to success.
    • Relevance and challenges in intermediation of the insurance business cannot be underestimated.
    • Specialists to speak on various topics related to intermediaries training & HR interface
  • 4. Definition
    • What is Insurance ???
      • Insurance is all about a promise of a payment / service.
      • Emerging Customer centric Business Model in India
  • 5. The Changing Context In India
    • Personal Lines -
        • Car repair syndrome
    • Commercial Lines
        • Fire claims syndrome
  • 6. Challenges Ahead : Global context
      • The emerging expectations
        • of the promise
        • of the intermediaries
      • Managing these expectations
        • Long haul process of change management
  • 7. Presentation Flow
    • No of Slides
    • Intermediaries 3
    • Current Scenario 4
    • Intermediaries - a schematic 1
    • Personal Lines Business 4
    • Motor product Intermediaries 2
    • Commercial lines 1
    • Other Issues 1
    • Summing up 2
  • 8. Intermediaries
    • Definition
      • The link between insurer and insured (Customer) for insurance sales and service.
    • Key/Formal Insurance intermediaries include
      • Insurance Agents
      • Brokers
      • Insurance Consultants
      • Surveyors and Loss Assessors
      • Third Party Administrator
      • Reinsurance Broker
  • 9. Intermediaries (contd.)
      • Other Intermediaries :
        • Co-operatives
        • Actuaries
        • IT Systems provider
        • Rating agencies
        • Any other person assisting and representing an Insurer in any of the following:
          • Soliciting, negotiating, procuring or effectuating an insurance contract or its renewal;
          • Disseminating information relating to coverage or rates;
          • Forwarding an insurance application;
          • Servicing and delivering an insurance policy or contract
  • 10. Intermediaries (contd.)
        • Inspecting a risk;
        • Setting a premium rate;
        • Investigating or assessing a claim or loss;
        • Transacting a matter after effectuation of a contract;
        • Representing a matter after effectuation of a contract;
        • Representing or assisting an insurer or other person in any other manner in the transaction of an insurance contract;
        • Servicing a policy or contract.
    • The total intermediation equation has to be right to be a successful insurance company in the new environment.
  • 11. Current Scenario
    • Key Intermediaries
    • Agents
      • Primacy to insurer’s interest (FACE OF INSURANCE COMPANY)
      • Cannot represent multiple insurers hence are “tied” to an insurer
      • Practical training and passing of examination is mandatory and sponsored by one insurer
      • Discourages switching of Insurers
    • Broker
      • Primacy to insured’s interest
      • Can represent multiple insurers to provide suitable products to the insured
      • IRDA has formulated regulations governing insurance brokers (to be passed)
  • 12.
    • Key Intermediaries
    • Surveyor / Loss Assessor
      • To examine the claim and assess the actual loss suffered
      • To submit a report for the consideration of the insurance company
    • Third Party Administer (TPA)
      • Arises mainly out of Managed Health Care business.
      • Only “companies” registered under The Companies Act, 1956 are allowed to act as TPA
      • IRDA is finalising regulations governing TPAs.
    • Reinsurance Brokers
      • Link between insurer and reinsurance organisations
        • Incentivised by the reinsurer for annual treaties and facultative deals
    Current Scenario (contd)
  • 13. Current Scenario (contd)
    • Appointed Actuary
      • Provides actuarial advice to the management.
      • Assurance to IRDA
    • Co-operatives
      • Reach in rural areas
      • rural populace more comfortable while dealing with cooperatives.
    • IT Systems provider
      • Essential support for all new Insurance companies
      • IT systems backbone of the operations
    • Rating Agencies - AM BEST, Standard & Poor, Moody’s
  • 14. Current Scenario (contd)
    • Skill set of an agent and broker
      • Customer orientation
      • Advice customer according to needs
      • Ability to sell multiple products
      • Provide market intelligence
      • Good working knowledge of IRDA regulations and willingness to adhere to it
  • 15. Surveyor/ Loss Assessor Third Party Administrator Intermediaries - a schematic Reinsurance Broker Broker Insurance Company IT Systems Provider Bancassurance Actuary Other Intermediaries Agent Risk Advisory Corporate Individuals Co-operatives
  • 16. Personal Lines Business - Backdrop
    • Untapped potential largely due to
      • Lack of product knowledge and brand recall
      • Absence of a customer centric approach
      • Products not addressing the changing trends in customer needs
      • Low penetration due to inadequate marketing / delivery system
      • Absence of risk-cum-investment tools resulting in low involvement buying behavior
      • Unattractive commission structure
  • 17. Personal Lines - Opportunity Ahead
    • Increased consumerism
    • Increased social instability
    • Higher disposable incomes
    • Operation of law
    • Changing attitudes
    • Easier availability
    • Increased medical cost
  • 18. Some Challenges Ahead
    • Need to develop state of the art training institutes focussing on sales & management
    • Put in place scientific selection / recruitment of Intermediaries
    • Promote, encourage professional association of intermediaries and self-regulation concepts
    • Marketing support to distribution channels
    • Link business strategy more effective with technological reality
  • 19. Suite of Personal Line Products
    • Motor
    • Home & Home content
    • Health
    • Overseas Travel
    • Education
    • ...
    • Each line of business requires its own selling and processing intermediaries and dependency vary across the products
  • 20. Motor Product Intermediaries
    • Sales
      • Agents for vehicle insurance
        • Manufacturers wanting to become agents / brokers to provide one stop services to their customers
        • Auto Dealers: point of sale influencers in the value chain
        • Direct Marketing Agents:decision influencers at the point of provision of finance
    • Services
      • Surveyors
        • Assessing vehicle damage
        • Examining, Inquiring and Investigating the causes and circumstances of loss
        • Estimating measuring and determining the quantum of loss
  • 21. Motor Product Intermediaries (contd.)
    • Garages and Workshops to carry out actual repairs
    • Other Service Intermediaries
      • Towing service providers
      • On the spot repairs
      • Trauma services
        • Ambulance providers
        • Blood banks
  • 22. Commercial Lines- Intermediary Challenges
    • Key Issues
      • Business to Business vis-à-vis Business to Customer in PL
      • Key differentiation
        • Sales Process
          • Different skill sets and role of Agents / Brokers
            • More personalised approach
          • Risk Assessment Intermediary
        • Claims Servicing
          • Role of surveyor critical
  • 23. Other Issues
    • Bancassurance
    • Direct Channels
  • 24. Summing Up - Emerging Scenario
    • Emerging trend
      • Channels to evolve according to market opportunities /economics
      • Agents/Brokers will align to market and customer profile
    • Implies
      • Undertake agent profiling by doing intermediary mining
      • Align agents to products being sold and customers being targeted over time
  • 25.
    • Learning from banking industry?
    • Local flavour to play important role
    • Rules of the game will be written by Indian Companies
    • Key to success is keep ear to the ground and keep modifying as per changing requirements
    • Fit ground realities to your organisation’s business strategy
    Summing Up - Looking ahead
  • 26. Thank You
  • 27. Backdrop - Motor Insurance claims Insurance Company Garage owner Surveyor Car Dealer Agent or Broker Towing & other Services Financier
  • 28. Backdrop - Fire Insurance claims Insurance Company Surveyor Salvage Buyer Repairer Agent/Broker
  • 29. Insurance Education Insurance Education Management cadre Operational level Domestic Training Overseas training Intermediaries
  • 30. Direct Channels
    • Minimum physical contact
      • Call Centres
        • Ideal for renewal business
        • Economic dispensing of insurance related information
        • Service related guidance and support
      • E-Intermediaries
        • Internet based information dispensing
      • Other remote terminals
        • ATMs
        • Kiosks
  • 31. Banks as an Agent - Bancassurance (?)
    • Provides readymade customerbase
    • Approx. 70,000 bank branches
    • Insurance products can be linked with banking products
    • Comfort for customers since he is accustomed to doing regular monetary transactions with the bank.
    • Reach potential middle / lower class population
    • Ease in sale of standard products
    • Sales experience in other products
        • Mutual funds
        • Credit cards
        • Personal loans
    • Essential to keep the products simple
      • Pre-underwritten product guidelines