Traditional tied agency system
Why alternate channels?
Growth, improvement, convenience..
Good governance GMOOT
Principal – agency relationship
Face to face, smiling, reassuring
Brand ambassador of the insurer
Network and prestige
A provider of other services
Traditional and professional
Margin crunch - competition
Cheaper options – social media?
Shop assurance- Phil/
Mall assurance S Korea –thru TESCO
Virtual marketing thru’ kiosks, mobiles etc.
On-line buy / direct marketing
Strategies for marketing LI thru’ Social
Media – by 1st August
Individual - handwritten A4 sheets
Some of IRDA's functions include:
To regulate, ensure and promote the orderly growth
of the insurance business
To prescribe regulations on the investment of funds
by insurance companies
To regulate the maintenance of the margin of
To adjudicate the disputes between insurers and
To supervise the functioning of the Tariff Advisory
Tied agency / Corporate agent
Competency - knowledge
providing required services
Code of conduct
Non linked/Linked insurance products
Standard proposal forms for Life insurance…
Short title and commencement
As per Insurance Act, 1938, The insurance
companies are allowed to pay a maximum
commission of 40 per cent of the first year’s
premium, 7.5 per cent of the second year’s
premium and 5 per cent from there on. The
commission paid is limited to 2 per cent in case of
single premium policies. In case of pension plans,
the commission is limited to 7.5 per cent of the
first year’s premium and 2 per cent there on.
Currently most of the policies are very much
paying these kind of commissions
Commission on pension products
S P - 2%, Non SP 7.5% on FYP
and 2% on RP
Other products SP 2%
Commission rates – non pension and non –single plans
F Y 2nd & 3rd Year Subsequent years
5 15 7.5 5
6 18 7.5 5
7 21 7.5 5
8 24 7.5 5
9 27 7.5 5
10 30 7.5 5
11 33 7.5 5
12 years or more 35 7.5 5
1)Every insurer carrying on life insurance business shall provide
official illustrations to customers directly or through their licensed
agents and intermediaries for all products.
(2) All illustrations shall be prepared in consultation with the
Appointed Actuary and be authorized for use by the Board
of Directors of the Company and, that the illustrations shall
be clear and fair to enable a customer to make an informed
(3) There should be 2 views on rate of return on investments of
funds (the rate) that are illustrated – a higher rate and a
lower rate. The rates to be used are as set by the Life
Insurance Council from time to time and all the Life
Insurance Companies shall use the same rates. All charges in
respect of fund management and policy charges are to be
deducted from the gross investment return assumption. For
the avoidance of doubt this means that illustrations based on
higher and lower rates of return should show a projected
fund value after all charges associated with the policy and
investment of funds have been deducted. No Insurer carrying
life insurance business shall issue illustrations in any other
(4) All illustrations shall be reviewed at least
once a year in the month of April. The Life
Insurance Council may, if required by the IRDA,
set a higher and lower projection of interest
rates more frequently than annually. The initial
rates to be used in projections are 10% p. a. and
6 % p. a.
(5) All the insurers carrying on life insurance business shall be
free to use a lower illustrative rate than that is fixed if it so
desires. However, under no circumstance, higher rates than
those set by the Life Insurance Council shall be used.
(6) Standard common language be employed vis-à-vis
statutory warning on all illustrations. The following phrase
must appear on the front page of illustrations in the same
font size as the rest of the text: “Some benefits are
guaranteed and some benefits are variable with returns
based on the future performance of your Insurer carrying on
life insurance business.
If your policy offers guaranteed returns then these will be
clearly marked “guaranteed” in the illustration table on
this page. If your policy offers variable returns then the
illustrations on this page will show two different rates of
assumed future investment returns. These assumed
rates of return are not guaranteed and they are not the
upper or lower limits of what you might get back, as the
value of your policy is dependent on a number of factors
including future investment performance.”
(7) The process of issuing illustrations shall be controlled in such a manner
that customers are provided illustrations that are authorized by Appointed
Actuary and approved by the Board of Directors of the Company.
(8) All policy, fund management and other policy charges payable by
customers shall be included explicitly within the illustration tables.
(9) Indicated within the illustration shall be the Company’s policy on
surrender values. A Company may show illustrative surrender values if it
wishes and should indicate whether or not guaranteed.
2) Clear and fair information to customer for an informed decision, in
consultation with the AA, duly authorised by the Board.
3) It should contain 2 rates, as determined from time to time by LI C
4) Review periodically, at least annually if not specified by L I C
5) Lower rates can be given, but no higher rate be given.
6)Standard common language, font size and mandatory info.
7) Control by AA & BOD
8)All charges to be disclosed
9)Surrender values, if any to be indicated.
Treating Customers Fairly (TCF) norms
Consumers can be confident that they are dealing with
firms where the fair treatment of customers is central to the
Products and services marketed and sold in the retail
market are designed to meet the needs of identified
consumer groups and are targeted accordingly.
Consumers are provided with clear information and are
kept appropriately informed before, during and after the
point of sale
TCF would also ensure –
Where consumers receive advice, the advice is suitable and takes
account of their circumstances.
Consumers are provided with products that perform as firms
have led them to expect, and the associated service is of an
acceptable standard and as they have been led to expect.
Consumers do not face unreasonable post-sale barriers imposed
by firms to change product, switch provider, submit a claim or
make a complaint.