rough mktng insrnce prct final

8/9/2019 Rough Mktng Insrnce Prct Final

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CHAPTER – 1 INTRODUCTION TO MARKETING

Marketing is one of the most important expect that help any product

to develop and same is the case for Insurance sector and their product.

Insurance is a basically a service which is provided to the people rather

than a physical product therefore it is effected by service marketing.

Almost every marketing textbook has a different definition of the term

“marketing.” The American Marketing Association AMA! uses the

following" “The process of planning and executing the conception# pricing#

promotion# and distribution of ideas# goods# and services to create exchanges

that satisfy individual and organi$ational ob%ectives.”

Some of the main issues of maretin! in"o#"e$ in%#u$e&

Marketers help design products# finding out what customers want and

what can practically be made available given technology and price

constraints.

Marketers distribute products there must be some efficient way to get

the products from the factory to the end&consumer.

Marketers also promote products# and this is perhaps what we tend to think

of first when we think of marketing. 'romotion involves advertising and

much more. (ther tools to promote products include trade promotion store

sales# coupons# and rebates!# obtain in favorable and visible shelf&space# and

obtaining favorable press coverage.

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'(O)ERS O' SER*ICES

*lower of services refer to a well&formed package of total

services with all the supplementary services being well formulated

along with the core services. The various petals of the flower are

•

Information&

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A marketer needs to provide ade,uate information to his

employees and his customers. This information is general information

provided through various communication channels. In the insurance

industry information is provided to the customers with the help of"

o Agents

o -eminars

o eb sites

o 'rint media

o /adio# Television# etc.

• Consu#tan%+&

This is additional customi$ed information provided to the

potential customers by the service provider. In the insurance industryit is provided by company0s staff and agents.

E,am-#e" In 1I2 when a customer enters asking of information about

the policy# he is directed towards the assistant sales manager.

Assistant sales manager will listen to the customer0s re,uirement and

as per his re,uirement list the number of policies that are available.

3e will also ask the customer about the price and limit the number of

options for the customer# so that he can easily choose the policy

without confusion.

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• Or$er tain!&

(rder taking should be done without mistakes. In 1I2 order

taking is generally done by"

o 5y Agents

o (n eb site www.licindia.com!

o 5y Assistant sales manager directly in the office.

Hos-ita#it+&

3ospitality is a very pretty petal# reflecting pleasure at meeting

new customers and greeting old ones when they return. 3ospitality

finds its full expression in face&to&face encounters. In 1I2 customers

directly come in contact with the sales manager. The customers are

treated as guests. The sales managers of 1I2 are given special training

of how to sell the policies to the clients. It is only in 1I2 that acustomer can meet the chairman directly without any appointment.

• Safe ee-in!&

It is in the process and procedures used by marketers to safe

guard and to maintain secrecy. In 1I2 the data of the customers is

very important. They feed the data of the customers in their 'ront

an$ A--#i%ation Pro!ram Soft.are which is connected with all the

branches of 1I2. The data is only available with the sales people and

not shown to any person.

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E,%e-tiona#&

7xceptional service means service over and above customer0s

expectations.

1I2 has the fastest %#aim sett#ement in the .or#$ thereby providing

exceptional service. 1I2 also solves complains of the customers

within 8days.

•Pa+ment&

The payment of premium is normally through che,ues.

2ustomer can make payment in 1I2 through"

o Agents

o 1oans

o

eb siteso -tanding instruction to banks"

In this the account holder will give standing instruction to his bank

to pay the amount of premium every month without his consent on

the given date directly to 1I2.

/i##in!&

The billing should be done in such a way that there are no

mistakes and if there are any they must be immediately rectified. The

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billing should provide break&ups of premium charged# service

charges# etc.

STRATEG0 IMP(EMENTED 'OR MARKETING

5asically there are steps to be followed before selecting a marketing

strategy. These steps are as follows"

12 I$entifi%ation of Tar!et Maret&

The target market is the focus of deciding the promotion

mix. The total number of groups is analy$ed and decision is taken

regarding which segment is to be targeted.

E,am-#e& 1I2 India! has introduced a new life insurance policy

especially for children0s :77;A< A!.

32 Determination an$ Settin! O45e%ti"es&

-ervice marketers employ a range of promotional methods#

so it is essential to ?hat the promotion has to achieve0. It is

necessary to define marketing ob%ectives clearly so that most effective

type of promotion is designed and utili$ed.

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In case of insurance sector# the main ob%ectives of a promotion

campaign will be"

• To make all or maximum population aware of the various

insurance policies of the company.

• To promote the advantages of all the insurance policies.

• To make the people aware of the risks involved and the

importance of taking insurance.

E,am-#e& 1I2 India! conducts seminars and mass marketing

campaigns in order to make the customers aware of insurance and

why it is needed.

62 Messa!e $e"e#o-ment for ri!ht %ommuni%ation effe%t&

The message is an instrument for converting a suspect into a

prospect. To obtain an effective response from the target market# there

is always need to plan an effective message such that promotional

efforts cause"

• 5uilding of brand image

• -ervice awareness

• To provide knowledge for service

• To ensure that customer will have a positive perception for

service promoted

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• To build up preference for service offered

In the insurance sector# 1I2 India! and Met1ife Insurance are

examples of companies who have used promotion mix to promote

insurance.

E2!." 1I2 India! promotes its life insurance policies using the slogan

78in$a!i e saath 4hi9 :in$a!i e 4aa$ 4hi; This creates awareness

of risk of death as well as the importance of insurance. The slogan

creates a positive perception about life insurance in the minds of people.

2 Se#e%tion of -romotion mi,&

There should be a careful blend of promotion mix with the

marketing strategy of the firm and each situation should be

examined for its merits and demerits. The following criteria should

be considered while devising different promotional techni,ues"

(verall marketing ob%ectives

Activities of the competitors

2haracteristic of target customer

2ost effectiveness# etc.


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< P=S O' SER*ICE MARKETING O' INSURANCE

PRODUCT

The 8'0s of service marketing will be discussed below in

respect of Insurance sector and their product. The 8'0s of service

marketing are"

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'roduct mix

'rice mix

'lace mix

'hysical evidence

'eople mix

'rocess mix

'romotion mix

Pro$u%t Mi,

A product is anything that can be offered to a market to satisfy

a want or a need. A product mix is the set of all products and items

that a particular seller offers for sale. In case of insurance sector# the product mix comprises of 1ife and


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The Width of a product mix:

It refers to how many different product lines are available. In

case of insurance sector# there are generally three different product

lines i.e. 1ife Insurance# Marine Insurance and *ire Insurance.

(ife Insuran%e&

1ife insurance is a financial resource for your family and loved

ones in case of your death. It is a contract between you and an

insurance company in which the company provides your beneficiary

with a certain amount of money upon your death. In return# you make periodic payments premiums! in an amount that depends on medical

history# age# gender# and occupation.

Genera# Insuran%e"

The term general insurance essentially applies to the insurance

risk that is not life insurance or health insurance risk and so the term

covers familiar forms of personal insurance motor vehicle insurance#

fire insurance and travel insurance.

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INSURANCE

LIFE INSURANCE

Whole LifePolicy

LimitedPayment Life

Convertible

Whole LifePolicy

Joint LifeEndowmentPolicy

o!bleEndowmentPolicy

Jeevan Saathi

"oney #ac$Policy

Ann!ity Plan%

&ro!'In%!rancePolicy

&ENERAL INSURANCE

FireIn%!rance

"arineIn%!rance

"otorIn%!rance

#!%ine%%Ri%$

#!r(laryIn%!rance

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Whole LifeIn%!rance

Whole Life withPro)t Policy Limited PaymentWhole Life Policy

Sin(le

Premi!mWhole LifePolicy

The depth of a product mix:

;arious products and their different types. In the insurance

sector# one policy can be made available in different variations. -ome

of the examples are as follows"

(ife Insuran%e&

These product mix dimensions permit the company to expand its

business.

7.g." It can add new product lines thus widening its product mix.

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Pri%e Mi,

'rice is one element in the marketing mix that produces

revenueE all the other elements produce costs. 'rices are easiest

marketing mix elements to ad%ustE product features# channels and even

promotion take more time. 'rice also communicates to the market the

company0s intended value positioning of its product or brand.

In the insurance business# the pricing decisions are concernedwith the premium charged against the policies# interest charged for

defaulting the payment of premiums F credit facilities# commission

charged for underwriting F consultancy services.

Premium&

'remiums are the periodic payments usually monthly or

,uarterly that the policy holder pays to the insurance company to

purchase and keep a policy in force.

*or example in case of life insurance according to the policy it may

be the amount payable during the endowment term of the policy or

until the death of the life assured whichever is earlier.

Insurance is essentially a matter of sharing risk. A thousand

people contribute a certain fixed amount i.e. premium! and in future

if something were to go wrong with any of the mass contributors# the

lump sum collected as premiums is used to compensate for the loss.

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The basis on which the insurance company decides the amount of

premium to be paid by each person is determined mainly by 4 factors"

Morta#it+ Ta4#es"

All insurance companies refer to different mortality tables.

These tables differ from country to country. The mortality table

indicates the probability of a person dying in a particular age group.

*or e.g. in an age group of +9&4D years# the probability might be %ust

two# but this probability would increase for a higher age group of 69&

9D years.

E,-e%te$ Sur-#us&

The premiums collected by the insurer are invested in capital

markets. There is a fixed investment pattern for the insurer. (ut of the

surplus earned on the premiums invested# B9G is distributed to the

policyholders and the insurance company retains the balance 9G.

If an insurer expects to earn more return on his investment then he

would charge more premiums to his investor.

E,-enses&

An insurance company has to incur expenses in the form of

commission to agents# office expense# advertising expense# salaries to

employees. These expenses are to be managed by the company in the

9G surplus earning which they earn as mentioned above. In order to

meet the above expenses the insurer has to collect more premiums so

that there is more surplus from which expenses can be met.

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P#a%e Mi,

'lace mix can be defined as the “'hysical distribution i.e. the

delivery of goodsH services at the right time at the right place to the

customers.” 'lace decisions involve building relationships with the

wholesalers# retailers and through these intermediaries building

relationships with the customers. 'roducts and services must be at the

right place# at the right time in order to be consumed. 'robably the

best way to perceive place is to think of the flow of products frommanufacturer through intermediaries to the consumer or user. This

flow can be thought of as a channel used to move goods and services.

Channe#s&

According to 'hilip otler# “2hannels are sets of

interdependent organi$ations involved in the process of making the

product or service available for use or consumption” Marketing

channel decisions are among the most critical decisions facing the

management.”

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The channels chosen intimately affect all the other marketing decision

In case of insurance sector# the following channel of distribution is

followed according to the target market"

CHANNE(S

Jirect -elling Agents

*inancial Advisors

2all 2enters

'artner -elling 5ancassurance

'ostal Jepartment

-elling through 2orporate

Dire%t Se##in!&

• A!ents&

The agents are selected and recruited by the development officer of

the insurance company. These agents inform the customers about the

various insurance policies offered by the company and convince themto buy these policies.

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• 'inan%ia# A$"isors&

The financial advisors are also consulted by the customers regarding

their financial matters. These advisors suggest their clients to get their

goods insured against any calamity or risk. 3ence they act as a

channel in distribution of insurance.

• /an%assuran%e&

ith the evolution of interconnected financial services# banks are

converting themselves into ?one stop financial supermarkets0. This

has promoted two big classes of financial institutions" banks and

insurance companies to combine and deliver an innovative product

i.e. 5ancassurance. In bancassurance# the insurance products are sold

through the banks network of branches.

• Ca## %enters&

The people who re,uire insurance call up the call centers. These call

centers send their direct marketing agents who go to the customer0s

place and sell the insurance policy.

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• Posta# De-artment&

India has an extremely well developed postal network# which is even

stronger than the network of banks in the country. 'ost offices have

been established even in the interior parts of the country. Insurance

companies can tie up with the postal department to sell and distribute

various insurance covers. This would certainly re,uire upfronttraining costs# as the postal employees in turn need to educate and sell

the concept and benefits of insurance to the people in rural areas.

-uch a tie up with the postal department would open up India0s rural

areas# which are largely untapped for insurance sector. This can prove

to be a sustainable source of growing revenues.

Se##in! Throu!h Cor-orates&

Insurance can be sold through corporates too.

7.g." hen a customer purchases a Maruti car# he gets the insurance

of the car free from the Maruti 2ompany itself. Thus this is termed as

selling insurance through corporates.

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Ph+si%a# E"i$en%e

'hysical evidence is the environment in which the service is

delivered and where the company and the customers interact and any

tangible goods that facilitate the performance and communication of

the service. -ervices are intangible and heterogeneous. Intangibility

means that services cannot be displayed# physically demonstrated or illustratedE heterogeneity means that consumers cannot be certain

about performance on any given day. It plays a ma%or role in

enhancing customers0 perception of the service ,uality.

+D

Insuran%e

Ser"i%e

Tan!i4#es as Ph+si%a#

E"i$en%es

) 'olicy Jocuments

+ 5rochures

4 'eriodic -tatements

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Peo-#e Mi,

Em-#o+ees&

7mployees are very crucial because"

). They are the service

+. They are the brand

4. They are the marketers

6. They are the organi$ation in the eyes of the customers.

The various employees involved in providing service to the customer

in insurance sector are"

• Customer ser"i%e re-resentati"es"

They# process insurance policy applications# changes# and

cancellations. They review applications for completeness# compile

data on policy changes# and verify the accuracy of insurance

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company records. They may also process claims and sell new

policies to existing clients.


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Insurance investigators handle claims in which companies

suspect fraudulent or criminal activity# such as suspicious fires#

,uestionable workers0 disability claims# difficult&to&explain accidents#

and dubious medical treatment. Investigators usually perform

database searches on suspects to determine whether they have a

history of attempted or successful insurance fraud.

• Un$er.riters"

=nderwriting is another important management and business and

financial occupation in insurance. =nderwriters evaluate insurance

applications to determine the risk involved in issuing a policy. They

decide whether to accept or re%ect an application# and they determine

the appropriate premium for each policy.

• Insuran%e sa#es a!ents"

About )9 percent of wage and salary employees in the industry are

sales workers# selling policies to individuals and businesses.

Insurance sales agents# also referred to as producers# may work as

exclusive agents# or captive agents# selling for one company# or as

independent agents selling for several companies. Through regular

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contact with clients# agents are able to update coverage# assist with

claims# ensure customer satisfaction# and obtain referrals. Insurance

sales agents may sell many types of insurance# including life#

annuities# property&casualty# health# and disability insurance. Many

insurance sales agents are involved in “cross&selling” or “total

account development#” which means that# besides offering insurance#

they have become licensed to sell mutual funds# annuities# and other

securities.

• (a.+ers&

The insurance industry employs relatively few people in professional

or related occupations# but those who are so employed are essential to

company operations. *or example# insurance companies0 lawyers

defend clients who are sued# especially when large claims may be

involved. These lawyers also review regulations and policy contracts.


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Customers&

'eople mix not only includes employees but also customers. The

customers are to be treated with respect and courtesy. 2ustomer is the

king of the market. -atisfaction of the customer is the primary motive

of the insurance industry as well as all the organisation

Pro%ess Mi,

In case of insurance sector# the process mix includes the various

interactions that take place between the insurance agent and the

customer in the process of selling the policy to the customer till the

settlement of claims.

The following process mix is followed by insurance companies in

case of life insurance"

). The insurance agent calls up the customer and informs him about

the different policies offered by the company and the price mix of

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all the policies. If# the customer seems interested in taking the

policy then# he fixes an appointment with the customer.

+. The insurance agent meets the customer and gives him some

information about the insurance company and also about the

benefits of the policy.

4. The customer is then asked to fill a financial review form */*!

and the agent is asked to find out the standard of living of the

customer so that the insurance company gets a clear picture about

the financial condition of the customer and what kind of policy he

can afford.

6. The insurance company offers various policies but they might not

be suitable for the customer hence# on the basis of his re,uirements

and financial status# the insurance agent suggests two or three

policies to the customer# which will be suitable for him.

9. The insurance agent explains the different policy plans in detail to

the customer i.e. the amount of premium to be paid# the time

interval at which the premium is to be paid# the benefits of each of

the policy etc. A brochure is also provided to the customer wherein

the entire description of all the policies is given.

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@. Then# the insurance agent provides a feedback form to the

customer and asks him to give his feedback regarding the policies

that he has been informed about. This feedback is taken in order to

find out whether the customer is satisfied with the plans of the

policy or whether the company needs to make the policy plans

more attractive so that it may appeal to its future customers.

8. Then# the next appointment is fixed by the insurance agent with

the customer and in this meetingE the customer selects the policy

plan# which appeals to him. The customer is then asked to fill up

the proposal form which contains various details of the payment

and he is asked to make the first premium payment.

. Then# the insurance agent submits the duly filled and signed form

in the insurance office along with the other necessary documents.

7.g." Medical /eports in case of 1ife Insurance.

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B.Then# a reconfirmation is taken by the agent from the customer

that he agrees with the terms and conditions of the policy.

)D.The insurance agent then regularly collects the premium from the

customer whenever the premium becomes due.

Promotion Mi,

?'romotion0 is a descriptive term for the mix of communication

activities# which a service organi$ation carries out in order to

influence the target customers on whom their sales depend. It is an

element in an organi$ation0s marketing mix that serves to inform#

persuade# orH and remind people about an organi$ation or individual

goods# service# image# ideas# community involvement or impact on

the society. It is used in hopes of influencing the recipients feeling#

belief or behaviour through any form of communication.

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The types of promotional methods used in insurance sector are

as follows"

Advertising

'ublic relations

-ales 'romotion

'ersonal -elling

ord of Mouth.

A$"ertisin!&

It is a paid form of non&personal communication. It is used to create

awareness and transmit information in order to gain a response from

the target market. *orms of advertising are as follows"

12 Ne.s Pa-ers an$ Ma!a:ines"

1I2 give ads in the news papers and maga$ines round the year

to continue its brand image and also when new products are

introduced.


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32 E#e%troni% me$ia&

Insurance companies also advertise its services in the

7lectronic media like"

Internet >)e4sites?&

2ompanies like 1I2 www.licindia.com!# I2I2I

www.iciciprudential.com! all have websites from which

people can get the information about their products# prices#

various schemes# and lots of other information. 'eople can also

purchase the product through this website.

Te#e"ision"

2ompanies like (IC9 Met (ife In$ia9 advertise on television to

make people aware of their products and services.

Ra$io&

ICICI Pru$entia# advertises on B+.9 red *m.

62 /ro%hures&

4D


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2ompanies provide brochures to the customers so that they can

have a look on various schemes and their prices. 7g" 1I2 have

brochures of various schemes that are available different

languages i.e. 3indi# Marathi# 7nglish# and other regional

languages. They provide the brochure of the scheme the

customer has chosen# in the language which they understand.

5rochure will provide the customer the information like

features of the scheme# amount of premium to be paid# rebates

if any!# etc.

2 Hoar$in!s&

(IC put its hoardings where there is a mass flow of people#

especially outside the railway station or at the backside of the bus. hen

Met (ife was introduced it has put his hoardings on the side of the train# to

target huge number of people

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Pu4#i% re#ations&

'ublic relations are helpful for the companies to build their brand

image# to maintain good relationship with customers# to make the people aware of its recent happenings# etc. Mediums of 'ublic

relations are"

). Press re#eases"

This helps the company to convey its message to its customers and

other people.

+. Seminars"

These are held to provide information about the new product

launched# position of the company in the market# etc.

Sa#es Promotion&

12 Gifts&

1I2 provides diaries# pens# booklets# etc to its customers.

32 S-onsorin! E"ents&

7.g." Max


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Persona# se##in!&

A!ents&

It is the most widely used method of promotion by all insurance

companies. They recruit# train and motivate the insurance agents to

convince the customers to buy insurance policies of that particular

company. The agent also collects the monthly premium and settles

the claims of the customers.

Cha-ter – 3 Insuran%e /usinesses

INTRODUCTION

A promise of compensation for specific potential future losses in

exchange for a periodic payment. Insurance is designed to protect the

financial well&being of an individual# company or other entity in the case of

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unexpected loss. -ome forms of insurance are re,uired by law# while others

are optional. Agreeing to the terms of an insurance policy creates a contract

between the insured and the insurer . In exchange for payments from the

insured called premiums!# the insurer agrees to pay the policy holder a sum

of money upon the occurrence of a specific event. In most cases# the policy

holder pays part of the loss called the deductible!# and the insurer pays the

rest. 7xamples include car insurance# health insurance# disability insurance#

life insurance# and business insurance.

Insurance# in law and economics# is a form of risk management

primarily used to hedge against the risk of a contingent loss. Insurance is

defined as the e,uitable transfer of the risk of a loss# from one entity to

another# in exchange for a premium. Insurer is the company that sells the

insurance. Insurance rate is a factor used to determine the amount# called the

premium# to be charged for a certain amount of insurance coverage. /isk

management# the practice of appraising and controlling risk# has evolved as adiscrete field of study and practice.

-ecurity has always been a universal desire# right from the earliest

civili$ations. This ,uest for security has been a ma%or motivating force in the

progress of mankind. The early societies looked up to their families for

providing this security# which resulted in cohesive units. >radually# as

lifestyles changed and as man progressed into a more modern industriali$ed

setup# this cohesive ,uality of the family started fading. (ne had to look for

other ways of providing economic security and somewhere along the line

was born insurance.

46

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REASONS 'OR /U0ING INSURANCE PRODUCTS

Ask individuals wanting to buy life insurance# about how they

do their tax planning and the first reply will be & insurance policy.

-uch is the nature of life insurance. It is bought by almost everyone

right from the bigwigs of the business world to small retail investors.

And most buy it for one core reason & to save tax. 5ut this is not the

only reason.

• (i"in! too #on!"

Advances in the field of medicine have grown by leaps and

bounds over the past few decades. Jue to this# life expectancies have

gone up. This poses another problem for individuals. It is generally

observed that individuals who tend to live way beyond their earning

years like say# till the age of 9 or BD# usually face a problem coming

to terms with increasing costs of living.

• 'ear of -assin! a.a+ ear#+"

(ne is never sure about life. e often come across people

claiming that nothing is going to happen to themE that they are too

young to pass away. 5ut do they really know what the future holds for

them e can assure you they donNt# because the ,uestion Ohat ifN

has probably never crossed their minds. e only have to read

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newspaper headlines about the Tsunami# the earth,uake that took

place and such other natural calamities to understand how the future

can be unpredictable.

Individuals need to insure themselves to secure the future of

those who are dependent on themE especially so if they happen to be

the sole breadwinners. Kou wouldnNt want them to go through

hardships or rely on othersHrelatives# etc. This# in fact# is the prime

reason why one should buy an insurance policy.

•

Painfu# E,isten%e"Maybe an individual has planned well during his earning years

to secure himself financially. 3e has also designed his financial

portfolio in such a way that he is drawing a comfortable monthly

income to support his family expenditure. 1ife insurance can act as

the saving grace in two ways. (ne# by way of a medical rider like the

accidental death benefit rider# permanent disability benefit rider#

critical illness benefit rider. These riders are taken along with the life

insurance plan and help cover the medical expenses.

• Ta, 4enefits&

Jo we need to elaborate on this any further Traditionally# life

insurance has always been bought more for tax benefits than for what

It is actually purported to doE i.e. insure human life. 5ut the role of

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life insurance in an individualNs tax planning cannot# in any way# be

undermined. =nder the new regime# individuals can now invest up to

/s )DD#DDD in insurance premium to avail of a deduction from taxable

income. The tax sops provided on insurance help OincreaseN the

individualNs disposable income and make him consider taking a life

insurance plan which he otherwise may not have done.

• In"estment"

The other ma%or persons who invest in Insurance are those who

have earned good money in their young age and want to invest insome safe investment scheme which also provides additional benefits

like life insurance cover and pension benefits at later stages of life.

'UNCTION O' INSURANCE

PRIMAR0 'UNCTIONS&

a? Pro"i$in! Prote%tion"

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The primary function of insurance is to provide protection

against future risk# accidents and uncertainty. Insurance cannot check

the happening of the risk# but can certainly provide for the losses of

risk. 'rofessor 3opkins observes PInsurance is a protection against

economic loss# by sharing the risk with others.”

b! Co##e%ti"e 4earin! of ris&

Insurance is a device to share the financial loss of few among

many others. Jinsdale opines# insurance is a mean by which few

losses are shared among longer people. -imilarly# illiam 5evridge

observes# PThe collective bearing of risks is insurance.P All the

insured contribute the premiums towards a fund and out of which the

persons exposed to a particular risk is paid.

c! Pro"i$e %ertaint+&

Insurance is a device which helps to change from uncertainty to

uncertainty. This may the reason that :ohn Magee writes that the

function of insurance is to provide certainty. -imilarly# /egal and&

Miller observe# PInsurance is device whereby the uncertain risks may

be made more certainP.

SECONDAR0 'UNCTIONS&

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a!Pre"ention of #osses&

Insurance cautions individuals and businessmen to adopt

suitable device to prevent unfortunate conse,uences of risk by

observing safety instructionsE installation of automatic sparkler or

alarm systems# etc. 'revention of losses causes lesser payment to the

assured by the insurer and this will encourage for more savings by

way of premium. /educed rate of premiums stimulate for more

business and better protection to the insured.

b! Sma## %a-ita# to %o"er #ar!er riss&

3insdale observes# insurance relieves the businessmen from security

investments# by paying small amount of premium against larger risks

and uncertainty.

c! Contri4utes to.ar$s the $e"e#o-ment of #ar!er in$ustries&

Insurance provides development opportunity to those larger industries

having more risks in their setting up. 7ven the financial institutions

may be prepared to give credit to sick industrial units which have

insured their assets including plant and machinery.

Cha-ter @6 Insuran%e Maretin!

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Marketing of insurance products have become an important activity in the

insurance business. Insurance marketing is found both in the life insurance

sector as well as in non&life insurance sector.

(ife Insuran%e Maretin!

An Intro$u%tion to (ife Insuran%e Maretin!

1ife Insurance Marketing is one of the most strenuous %obs for those who are

involved in the insurance marketing.. It is because of the everlasting conflict

between the insurance companies which want to profit the most and the

insured person who wants to get as much compensation as possible from the

insurance company. 2ommissions for the 1ife Insurance companies are very

high and they seldom make profits out of the policies. Also the insurance

policy needs to be transparent so that the potential customer understands it

totally and should not feel that they have been treated unfairly by the

insurancecompany.

Reasons for (ife Insuran%e Maretin!

The 1ife insurance companies were paid very little premiums by young

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children or healthy people and thus the scope for profit was very small and

those who paid high rates of premium were the older beings who died and

the 1ife insurance companies compensate for that. 3owever nowadays the

1ife insurance premiums are almost the same for an young adult and an old

person who %ust had a ma%or operation.

As the (ife Insuran%e Maretin! 2ompanies already deals with this

type of a scenario# what one can do is to change the public perception about

the 1ife insurance companies. (ne can connect himself or herself with

companies whose workers need a plan for 1ife Insurance. (ne can also go to

crowded places and advertise for the 1ife insurance company. The 1ife

insurance companies also offer fliers and hanging banners. (ne can also

offer free 1ife check in a reputed place to the insured for at least once. (ne

should always give the life insurance policy holders existing a chance to

prefer the marketing techni,ues that the insurance company is presenting.

If the policy holder does this at a regular basis then the company has a high

chance of succeeding.

This is making the competition much tougher for the 1ife insurance

companies as most of the companies offer similar types of premiums and

facilities. -o it has become very important for the life insurance companies

to concentrate on (ife Insuran%e Maretin! and attract as many people as

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possible towards their company.

The 1ife Insurance 2ompanies prefer to go for >roup 1ife Insurance for a

group of people from a particular company or a family so that they get a

group of customers and even if they compensate for some of them for

various reasons they usually make it up with otherNs premiums. They also get

fewer papers to control and also they provide better facilities for their

clients. -o to promote this type of policy they need to have social and

industrial connections. 1ife Insurance market helps developing that. 7ven

for other policies like term life insurance and permanent life insurance one

needs to be aware of making people reali$e the profits of the policy by

various means provided by marketing agencies.

-o before going for a (ife Insuran%e Maretin! one actually needs to

know the market target and the desires of the people who are actually seen

as potential insurance customers.

(ife Insuran%e Maretin! Strate!ies

• A very common way to promote a 1ife insurance company through

(ife Insuran%e Maretin! is to make the name of the company familiar

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to others by means of television commercials# handling out pamphlets#

hanging banners in populated areas and by providing exciting offers.

• Telephone marketing is another way of 1ife Insurance Marketing. (ne

can see the telephone companies send messages about various offers and

they even make phone calls. eb Insurance Marketing is another good

strategy to promote insurance policies. The pop ups that one sees while

using Internet are actually a very effective way of sending messages

across the potential insurance customers.

• (ne should listen to the existing 1ife Insurance 'olicy 3olders as well

as the potential 1ife insurance policy holders and listen to what people

who actually matters have to say. (ne common problem that the insured

persons face is that the insurance companies do not inform its clients about

the hike in the premium rates. These things should be kept in mind.


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7minent workers %oin local community institutions# such as 2hamber of

2ommerce# and by signing up there one can help out various pro%ects that

take place. These kinds of activities and social works on behalf of the 1ife

insurance company helps the company to get free publicity as their names

are published in news paper and in media also. Joing charity works also

helps the 1ife insurance companies to come across various people who act

as volunteers and can act as their potential 1ife insurance clients. 'eople

also like to deal with like minded people and companies and this is how

many deals are made.

• A 1ife Insurance 2ompany should not charge different 1ife insurance

client different charges for the same policy. This kind of policy gives the

1ife insurance policy holders the feeling that they are being treated

unfairly and also that the 1ife insurance companies are only looking for

profits and not the betterment of customer welfare.

• hen a 1ife insurance claim is filed# especially for a very big hefty

amount# the 1ife insurance company should help out the policy holder in

processing out the paperwork. (ne should not let bureaucracy enter and

make it so difficult for the one making the claim so that he gives his

claim .This has always been a common tactic on the insurance companyNs

part to avoid paying claims claimed by the policy holder. This though

makes a short term profit for the company but it hurts in the long run as

the reputation of the company is hampered severely.

• 'eople in this 1ife insurance industry should always try to keep in

constant contact with the existing customers as well. The competition in

the insurance market is so fierce today that no company wants to loose out

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on a customer to another company. 2lients who are not contacted for a

longer period of time normally fail to remain loyal to the insurance

company and look for a different 1ife insurance company. The company

can keep the records of the clientNs birthday and days like anniversary and

sent him or her small tokens of love or loyalty at a regular basis. If the

company can afford a little more it can send dinner coupons to the 1ife

insurance policy holder. These things play a ma%or role and can be

considered as an effective (ife Insuran%e Maretin! strategy.

• May be the most crucial thing in insurance marketing is to always

speak about unity and honesty while dealing with a business. A 1ife

Insurance 3older can find so many frauds in various life insurance

companies today# that life insurance customers are going for products and

services which are trustworthy to them. *eeling safe is about insurances

and other things are most important as far as the insurance holder is

concerned. -o# if a company remains loyal to its customers it will itself do

1ife Insurance Marketing for itself. -o# only by remaining loyal to its

customers the company can do a world of good to its reputation.

Hea#th Insuran%e Maretin!

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An Intro$u%tion To Hea#th Insuran%e Maretin!

3ealth Insurance Marketing is one of the most difficult %obs in insurance

marketing. It is because of the everlasting conflict between the insurance

companies which want to profit the most and the insured person who wants

to get as much compensation as possible from the insurance company.

2ommissions for the health companies are very low and they very seldom

make profits out of health insurance.

Reasons for Hea#th Insuran%e maretin!

The health insurance companies were paid very little premiums by young

children or healthy people and thus the scope for profit was very small and

those who paid high rates of premium were the older people who often get

ill and the health insurance companies compensate for that. 3owever

nowadays the health insurance premiums are almost the same for a healthy

young adult and an old person who %ust has had a ma%or operation.

As the 3ealth Insurance Marketing 2ompanies already deal with this type of

a scenario# one can have an alternative view of the health insurance

companies. (ne can be associated with companies whose workers need a

plan for health. (ne can also go to crowded places and advertise for the

health insurance company. *or the purpose of advertisement the health

insurance companies offers fliers and hanging banners.

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They also offer free health checks in reputed places to the insured. (ne

should always give the life insurance policy holders# existing or potential# a

chance to understand the gifts and opportunities the insurance company is

presenting to make them comfortable and make them feel that they care for

the clients. If this is done regularly by the company then there are high

chances of success in attracting customers on the part of the company.

This has invited tough competition for the health insurance companies as

most of the companies offer similar types of premiums and facilities. -o it

has become very important for the life insurance companies to focus on

3ealth Insurance Marketing and attract as many people as possible towards

their company.

It is hence mandatory for one to know about the market target and the

desires of the customers before going for health insurance marketing.

The confusion about the way a 3ealth Insurance Marketing conductor can

draw the potential Insurance holderNs attention evaporates fast if he knows

his targets and aims clearly. -o# it is important to conduct a survey and then

aim at attracting people.

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Hea#th Insuran%e Maretin! Strate!ies

• A very common way to promote a health insurance company through

3ealth Insurance Marketing is by making the name of the company

familiar to others by means of television commercials# handling out

pamphlets# hanging banners in populated areas and by providing exciting

offers.

• Telephone marketing is another way of 3ealth Insurance Marketing.

(ne can see the telephone companies send messages about various offers

and they even make phone calls. eb Insurance Marketing is another

good strategy to promote insurance policies. The pop ups that one sees

while using Internet are actually a very effective way of sending messages

across the potential insurance customers.

• (ne should listen to the existing 3ealth Insurance 'olicy 3olders as

well as the potential health insurance policy holders and listen to what

people who actually matters have to say. (ne common problem that the

insured persons face is that the insurance companies do not inform its

clients about the hike in the premium rates. This things should be kept in

mind.


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• A 3ealth Insurance 2ompany should not charge different health

insurance client different charges for the same policy. . This kind of policy

gives the health insurance policy holders the feeling that they are being

treated unfairly and also that the health insurance companies are only

looking for profits and not the betterment of customer welfare.

• hen a health insurance claim is filed# especially for a very big hefty

amount# the health insurance company should help out the policy holder in

processing out the paperwork. (ne should not let bureaucracy enter and

make it so difficult for the one making the claim so that he gives his

claim .This has always been a common tactics on the insurance companyNs

part to avoid paying claims claimed by the policy holder. This though

makes a short term profit for the company but it hurts in the long run as

the reputation of the company is hampered severely.

• 2ommunity 3ealth Insurance Marketing is another way to get

promotion and a high recognition for the health insurance company.

7minent workers %oin local community institutions# such as 2hamber of

2ommerce# and by signing up there one can help out various pro%ects that

take place. These kinds of activities and social works on behalf of the

health insurance company helps the company to get free publicity as their

names are published in news paper and in media also. Joing charity works

also helps the health insurance companies to come across various people

who act as volunteers and can act as their potential health insurance

clients. 'eople also like to deal with like minded persons and companies

and this is how many deals are made.

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Insuran%e A!en%+ Maretin!

The basic of an Insuran%e A!en%+ Maretin! is to increase the impact of

an insurance companyNs business as much as possible. Insuran%e A!en%+

Maretin! is used to make the pro%ect work and profit as much as possible.

7very insurance company has its own Insurance Agent Marketing budget

and the company employs its Insurance Marketing Agent accordingly. -ome

choose cheap agencies and some choose Insuran%e A!en%+ Maretin! who

are renowned in the market better known as branded agencies.

Most of the big insurance companies prefer branded agents because the

bigger ones have better resource and better employees than the smaller ones.

It is important to choose a suitable Insuran%e A!en%+ Maretin! because

more than anything else the insurance products would be sold on the basis of

itspresentation.

Any customer today gives special emphasis on proper information. Most of

the Insurance customers or the potential insurance holders are well informed

today and that is why Insuran%e A!en%+ Maretin! should depend mainly

on the media that provide information. -o the marketing agency should

concentrate on providing information in the media like news paper#

television maga$ines and through Internet as well. This is a very easy and

cheap way to make people aware of oneNs company. Another way the

Insuran%e A!en%+ Maretin! can go on which is by employing good

salesman who can work as individual agent for the company.

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Cha-ter – Re%ent Strate!ies

Strate!ies a$o-te$ 4+ the -#a+ers in the maret

>one were the days when the customers were forced to take up the kind of

products whatever coming from 1I2Ns and >I2Ns stables. 5ut now# the

customer has been portrayed as the king and to his delight# the products are

redesigned and customi$ed suiting his need taking into account his paying

capacity and multiple benefits.

1et us look at the strategies adopted by the players in the market.

Shift in the -ro$u%t -ortfo#io

7arlier the entire industry was revolving around investment and savings

oriented plans. As the interest rates are moving southwards# all the players

are deliberately focusing on selling pure risk covers in an effort to capture

the new customers. The premium on such products is low as it covers only

the risk aspect and does not factor in investments or savings. 7ven the

market leader 1I2 has withdrawn some of the products# which are

positioned# on the assured returns platform. Though the share of the term

plans in the product portfolio is ,uite negligible# the shift towards the term

products is already visible. Typically a term plan does not provide anything

by way of maturity# unlike money back or endowment policies.

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*a#ue 'or Mone+ >*'M?

The sea change since the sector opened up has been on the way the basic

products have been packaged innovatively# often tailor made to provide a

bundle of benefits to the customers. This is possible through the introduction

of riders# which have added value to the risk cover at minima /iders are

nothing but add&ons coming along with the base policies for a slightly

additional premium. /iders have become the ma%or instruments for the

organi$ations to lure the customers away from the competitors.

Ta--in! the Ni%he Marets

'rivate insurers are concentrating much on designing attractive products by

investing heavily on research# studying life expectancy and health statistics

across age groups# income levels# professionals and regions on their own

instead of relying on data with state insurers. The products are designed with

a technical team of actuaries and a product development team working

closely together to target the niche market.

Thrust to the rura# marets

Thanks to the norms stipulated by the regulator I/JA# all the players have

turned their eyes towards the rural market. The rural obligation on part of the

new private insurance companies is incremental in nature. It goes from 9G

to )9G over the period of 9 years for life insurance and from +G to 9G in

case of general insurance.

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MODERN MARKETING APPROACH

INTRODUCTION

The Insurance sector plays a vital role in the economic development of our

nation. It acts as a mobili$e of savings# financial intermediary# promoter of

investment activities# stabili$er of financial markets and a risk manager.

India is still an under&insured country in the world. It is at the )th position

among 1ife Insurance markets and +th in


54/71

hile determining the implementation methodology# the four characteristics

vi$. Intangibility# Inseparability# 'erishability and ;ariability gives rise to

certain uni,ue re,uirements that deserve careful attention while formulating

the marketing strategy for insurance. After implementation# the insurers

should concentrate on the effective control that would enhance their

business.

In India Insurance is sold and not bought. The agents H Advisors by using

various strategies sell the product by convencing the customers.

This approach to selling their products re,uires understanding of concepts

and principles borrowed from the fields of psychology# communications# and

sociology and needs a lot of personal commitments and self C discipline

from the seller.

The commitments referred are"

• *inding and understanding the needs of the customers.

• 'artnering with the customers.

• 3elping the customers to achieve his business and other ob%ectives by

the purchase of the product or service.

• 5elieving that your products H services are a great fit with your

customer0s needs# and

• 5elieving in yourself and your ability to help the customers in solving

their problems.

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PUNCH (INES AND (OGOS )HICH ARE A((OTTED

/0 SOME COMPANIES&

It helps to create awareness about the brand among the target

audience. It also helps the company to convey its message to the

customer.

/ran$ Positionin!& Ta! (ine

1I2 Lindagi ke saath bhi# $indagi ke baad bhi

(riental

Insurance

'rithvi# Agni# :al# Aakash# -abki suraksha hamare

paas

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Cha-ter @B

MARKETING TRIANG(E 'OR INSURANCE

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Com-an+&

The company makes various promises to its customers through 7xternal

Marketing. The external marketing function relates to anything that is

communicated to the customer before the service is delivered. There are

many factors beyond the traditional marketing mix that communicate to the

customers in case of 1I2.The Marketing Mix i.e. the product# price# place and promotion of 1I2 is

been already explained the 8 '0s. 3owever# the important role of Agents in

1I2 cannot be neglected.

A!ents&

1I2 is a kind of organi$ation where Agents play one of the most

prominent roles.


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2ompany itself i.e. they themselves carry out 7xternal Marketing and

commit certain promises to its potential customers.

Em-#o+ees&

The agents and the development officers act as the front&line staff and

they are in direct contact with the potential or existing customers. They are

the ones who keep or satisfy the promises made by the company. Themarketing of insurance basically comes under concept selling. The agents

are thus given various incentives# rewards# commissions and all the

necessary training re,uired.

As regards incentive# they receive '1I 'roductivity 1inked

Incentive!# which is based on the increase in premium amount and the sums

assured by the agent. They are also given extra commissions in case of

policies# which are of high value. There are normal promotions for any good

work done on a regular basis. The agents generally work under the training

and guidance of their respective development officers.

These incentives provided to the Agents and other employees are a

part of Internal Marketing. Internal Marketing relates to meeting the needs

of the employees so they can meet the needs of their customer. As explained

above# the company tries to meet the needs of the employees or try to

motivate them through their needs there by satisfying customer needs.

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Consumers&

The consumers are the policyholders. Apart from the routine life

insurance policies other services like housing finance# mutual funds# pensionand group insurance. Thus the range of consumers is far and wide.

The employees of the 2ompany need to convince the 2ustomers

through Interactive Marketing. Interactive Marketing is nothing but

implementation of a marketing policy that is founded on direct interactive

contact with the customer or the desired customer. It is done through

different types of 7mployee&2ustomer communication# 2ustomer (riented

'rogrammes# after sales services etc.

As explained earlier# the 1I2 Agents try to convince the customers to

get the appropriate policy provided by the 2ompany. ord of mouth

promotion and 'ersonal Approach is one of the ma%or aspects of Interactive

Marketing in any Insurance 2ompany.

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MARKET SEGMENTATION

According to 'hilip otler “Market segmentation is the sub-

division of a market into homogenous sub-sets of customer where

any sub-set may conceivably be selected on a market target to bereached with a distinct marketing mix”

Thus market segmentation is the process that segments a market

into smaller sub&markets called segments. -egmentation is normally

performed along with demographic# geographic# psychographic# and

behavioural variablesE

• Demo!ra-hi% "aria4#es describe characteristics of populations

and include age# gender# race# education# occupation# income#

religion# marital status# family si$e# children# home ownership#

socioeconomic status# and so on.

• Geo!ra-hi% "aria4#es include various classifications of

geographic areas# for example# $ip code# state# country# region#

climate# population# and other geographical census data.


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• Ps+%ho!ra-hi% "aria4#es describe life style# personality# values#

attitudes# and so on.

• /eha"ioura# "aria4#es include product usage rate and end# brand

royaltyE benefit sought# decision making units# ready&to&buy stage# and so

on. This information can be extremely useful for marketing purposes.

Criteria of effe%ti"e se!mentation&

• Measurable& si$e# purchasing power characteristics of the segment must

be measurable

• -ubstantial & The segment must be substantial enough to earn profit

• Accessible& The segment must be accessible

• Jifferential& The segment must be conceptually distinguishable and

respond differently to different marketing mix

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• Actionable& 7ffective programme must be formulated for serving the

segment

Insuran%e Maret Se!mentation&

In insurance industry# profiling is very important in determining

premium rates. Typically# insurers collect every information available.

3owever# analy$ing thoroughly is not feasible since the number of variables

is normally large.

The starting point is thus mass marketing. In mass marketing# the

seller engages in the mass production# mass distribution and mass promotion

of one productH service for all buyers. A niche on other hand is a more

narrowly defined group seeking a distinctive mix of benefits.

In terms of target customers# insurance products can be broadly

classified into products that can be used to indemnify perils that are faced by

a few individuals or industries. These can be termed as mass market and

niche market products. Also# in terms of product complexity# insurance

products can be categori$ed into low complexity and high complexity

products.

(o. %om-#e,it+ -ro$u%ts& These are simple products with a standard set

of covered risks# perils and ha$ards.

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Hi!h %om-#e,it+ -ro$u%ts& They have a large number of riders and

warranties and do not indemnify certain causes of loss.

IMPORTANCE O' SEGMENTATION IN INSURANCE&

• 3elps to understand the need and the re,uirement of the

policyholder and accordingly helps to cater i.e. the needs and the

re,uirement rural sector is different from the urban sector

• -egmentation helps in having a microscopic study of culture

language# likes and dislikes. This helps in marketing decision

which indirectly helps to cater all segments like rural F urban#

men F women# agriculture and industrial.

• -egmentation helps to make promotional measures more creative

like advertisements# personal selling# pricingHfee decision.

-egmentation helps to cover maximum policy holder. It helps to

identify profitable segment and helps in formulating attractive

packages.

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• Many successful insurance companies will recogni$e the Internet?s

potential as a powerful marketing tool.


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It has entered the banking consortia of over 9D corporates for providing

working capital finance# trade services# corporate finance and merchant

banking. It is also providing sophisticated product structures in areas of

foreign exchange and derivatives# money markets and debt trading and

e,uity research.

)ho#esa#e 4anin! ser"i%es

5lue&chip manufacturing companies in the Indian corp to small F mid&si$ed

corporates and agri&based businesses. *or these customers# the 5ank

provides a wide range of commercial and transactional banking services#

including working capital finance# trade services# transactional services# cash

management# etc. The bank is also a leading provider of for its to corporate

customers# mutual funds# stock exchange members and banks.

Retai# 4anin! ser"i%es

The ob%ective of the /etail 5ank is to provide its target market customers a

full range of financial products and banking services# giving the customer a

one&stop window for all hisHher banking re,uirements. The products are

backed by world&class service and delivered to customers through the

growing branch network# as well as through alternative delivery channels

like ATMs# 'hone 5anking#


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ithin this business# the bank has three main product areas & *oreign

7xchange and Jerivatives# 1ocal 2urrency Money Market F Jebt

-ecurities# and 7,uities. These services are provided through the bankNs

Treasury team. To comply with statutory reserve re,uirements# the bank is

re,uired to hold +9G of its deposits in government securities. The Treasury

business is responsible for managing the returns and market risk on this

investment portfolio.

3J*2 5A


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• 'erformance of agent is based on the lead generation and the lead

conversion made via follow& ups# no. of policies sold.

• They have no co& branding strategy.

AIS /ANK

Axis 5ank 1imited# formerly =TI 5ank#

is a financial services firm that had begun

operations in )BB6# after the >overnment

of India allowed new private banks to be

established. The 5ank was promoted %ointly by the Administrator of the

-pecified =ndertaking of the =nit Trust of India =TI&I!# 1ife Insurance

2orporation of India 1I2!# >eneral Insurance 2orporation 1td.#


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• Axis has more than insurance products.

• Advertisement is done through banners# brochures etc

•

Axis bank has tie&ups with Max C


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Marketing of Insurance can be useful for companies who want

sell the policies# increase profit share# market share.

Thus it is clear# that insurance sector is booming and is one of

the most dynamically growing sectors of the Indian chapter.

>rowth potentials are tremendous# and in era of cutthroat

competition# the best marketer can reach to di$$ying heights.

/I/(OGRAPH0

5ooks

-ervice Marketing by /avi -hankar

Insurance by M. :. Mathew

Marketing in -ervices by 'hilip otler

)e4#io!ra-h+

ebsites

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www.wikipedia.com

www.hdfc.com

www.axis.com

www.google.com

Anne,ure

uestionnaires

). 3ow many insurance products do you have in your organi$ation

+. hich advertisement promotional methods are used hich one is

best

4. hat are segmentation criteria for marketing insurance product

6. hat kind of hierarchy is maintained at marketing level

8D


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9. Jo you provide any special training to an insurance agent

@. 3ow do you analy$e their performance

8. hat is overall percentage advertisement expenditure

. Jo you have any co&branding strategy If yes which is other

company

rough mktng insrnce prct final

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