Internet as an Insurance Distribution Channel- An Empirical Study
Jaya Nema Sr.Faculty,
After the liberalization of Indian economy various reforms has been made in the insurance sector which has finally opened the gate of this industry for private sector companies. This has brought changes not only in the design of the products available in the market but also the manner in which they are marketed. There is a pragmatic change in the customization of latest products and services, regulatory norms, customer demographics, channels of distribution, greater use of information technology especially as a service facilitator. Even consumer preferences have been changing noticeably influencing the product mix offered by various public and private insurers. A vast potential exists in the Indian market as the demographic factors like average life span and standard of living are improving creating a demand for products that can offer protections and also double up investments of the customers. Also because of liberal government norms and India’s large population which now possess greater risk awareness, Indian insurance market has a global framework attracting major international insurance companies. All these above mentioned factors are directly responsible for increased competition and shaping the overall insurance industry with new parameters. To harness the opportunities insurance companies must go close to the customers by expanding their distribution network. Insurance Distribution – A Micro View
The liberalization of the Indian insurance industry in the year 2000 led to the entry of private insurance companies with Multinational companies as their partners For them ,breaking the large agent led network of LIC which was enjoying the monopoly for decades was extremely tough. They decided to use aggressive advertising and promotional measures and also other untried distribution channels like having a tie-up with other financial service providers companies and use their distribution network instead of setting their own. According to the industry observers marketing, distribution and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in future. Private insurers hoped to effectively leverage the strengths of these innovative marketing mix tools. A variety of distribution channels are currently being used in the market. Direct Agents and company sales force dominated the market over years by building personal credibility and faiths in the minds of the clients. Bancassurance and broker led channels are of recent origin. Reaching out to bank’s existing customers would be very convenient and easy for the bank already had a well established relationship with their customers. They are well 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. Broker led channels are also being reviewed by the IRDA (Insurance Regulatory and Development Authority) as they are having an unfavorable image. But the most talked about contemporary channel is the internet driven channel. The widespread diffusion of the Internet has created an explosion in the growth of electronics channels. Almost every industrial sector is computerized now. Computers are reaching to even rural areas and its education is given high importance now. Though the level is still low Information Technology is radically changing the way business is done. Internet enables insurers achieve wider reach, maintain customer’s interest and provide 24 hours service to customers. It also helps in reduce costs, faster processing of transactions and improving purchase decision through organized information. However,...
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