Insurance Distribution through Online Channel – Challenges and Opportunities

Distribution methods of Insurance products are rapidly changing. This is because of technology changes & consumer change along with it. The vast expansion of internet is causing a major shift in insurance purchase.

Insurance distribution is not simply about pushing product but with it brings exotic methods of managing risk. During distribution, relationships and trust are built with agents, brokers, and customers simultaneously opportunities are identified and created, and thus products and services are sold.

The agent channel and wholesale distribution in one form or another is here to stay. Personal insurance advisors are capable of dealing with services to the consumers while playing a vital role in the advice on management of complex insurance products as they already know their customers.

Strong relationship exists between insurance agent & the customer. Days are not gone for traditional agency channel, as still people are approached by particular insurance company agents for sell of policy and further assuring best of services as & when required.

Insurance Industry trend – Decline in number of independent agencies.

Post privatization, almost after two decades of stability, insurance distribution is now in mode of rapid change. Year on year, owing to retirements, mergers, and acquisitions, there are decrease in number of agencies and agents than that in last year with no end to this trend in sight.

Consumer behavioral change:

Reported growth is seen in direct methods of distribution, including but not limited to Internet distribution. Consumer behavioral change is also witnessed, as now-a-days people choose to buy insurance through internet. Online mode of payment is considered as comfortable and safe by many to opt this option.

This mode of purchase has its own benefits like, appropriate research on pricing & benefit structure of the insurance product can be done before purchase, online services can be accessed from any place irrespective time & also online purchase offers good discounts. This has boosted scope of online insurance sale significantly & lots of Insurance companies are looking forward to leverage this mode of distribution as large number of people buy and renew their policies online without preferring agent to act on their behalf.

Insurance Companies role in online sale:

Existing Insurance Companies including traditional ones now need to act fast before the momentum is gained by the new competitors who aim to serve their customers only through online mode of business distribution. A company long reliant on independent agents can choose online mode of distribution as there will always be enough customers preferring this channel.

New emerging companies working only on online platform have leveraged advanced information technology to position them in top for online sale. Trends shows, Company’s websites are receiving huge enquiries from customers. Insurance Companies have now begun to offer discounts on the premiums in view of reduced costs which would have been high owing to remuneration to intermediaries & administration involved.

New technologies have the greatest potential to help insurance industry

Information technology will continue to make an impact on the ability to improve the accuracy and speed of service to both distribution and customers. The mobility enabled by wireless technology is becoming mainstream and is changing work styles of Insurers. Customer self-service and online purchasing of insurance products and online policy delivery have the greatest potential to help Insurance industry.





MCQ’s on General Insurance Licentiate Exam : IC 01 / IC 11 / IC14 (Total 300)




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