MARKETING OF INSURANCE

Richi ChhabraSrishti Arora(BBA – B & I, 5th sem)

Contents-

Basic concepts Types of insurance Life insurance Non – life insurance Marketing of insurance

Basic Concepts

Marketing - Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. It is a mix of 7 p’s namely –ProductPricePlacePromotionPeopleProcessPhysical evidence

Insurance - A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

Types of insurance

o Life insuranceo Non-life insurance

Life insurance is a contract between an insurance policy holder and an insurer, where the insurer

promises to pay a designated beneficiary sum of money (the "benefits") upon the death of the insured person or on the expiry of a fixed period. Depending on the contract, other events such as terminal illness

or critical may also trigger payment. The policy holder typically pays premium, either regularly or as a lump sum amount. Other expenses (such as funeral

expenses) are also sometimes included in the benefits.

The advantage for the policy owner is ‘piece of mind’ in knowing that the death of the insured

person will not result in financial hardship for loved ones and lenders..

TERM ASSURANCE PLANS WHOLE LIFE PLANS ENDOWMENT ASSURANCE PLANS FAMILY INCOME POLICY JOINT LIFE INSURANCE HEALTH INSURANCE BENEFITS FOR HANDICAPPED DEPENDENTS PENSION PLANS UNIT LINKED PLANS

Term assurance provides life insurance coverage for a specified term. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

There are three key factors to be considered in term insurance:

(a) Face amount (protection or death benefit)

(b) Premium to be paid (cost to the insured)

(c) Length of coverage (term)

Whole life policies are issued for life.It means that the policy amount will be paid at the death of the life assured.The life assured,thus,cannot get the policy amount during his lifetime;only the dependents will get the advantage of this policy.The whole life plans can be effected either by payment of -

Single premium Continuous premium Limited premium

An endowment policy is a life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.

The duration of policy may be 10,15,20 or 30 years. Where the duration is short the premiuim involved is high.

Pure endowment policy Ordinary endowment policy Joint life endowment policy Double endowment policy Fixed term endowment policy Educational annuity policy Triple benefit policy Anticipated endowment policy

This plan may be offered to a person who has a handicapped dependant satisfying conditions as specified in Section 80DDA of Income Tax Act, 1961. The plan provides life insurance cover throughout the lifetime of the purchaser. The benefits under the plan are for the handicapped dependant which are partly in lump sum and partly in the form of an annuity.

Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, within the selected premium paying terms of 10, 15, 20, 25, 30 or 35 years or till the earlier death. Alternatively, the premiums may be paid in one lump sum (Single Premium).

Family income benefit insurance pays a monthly income if the policyholder dies while the policy is in force. The monthly income will continue at the level specified in the policy until the policy's termination date. If the policyholder lives to the end of the policy’s term, no benefit is payable.

Family income benefit insurance policies can be held by one policyholder (a single policy) or by two policyholders (a joint policy). In the case of a joint policy, the policy will commence paying out at the death of either policyholder. If both policyholders die whilst the policy is in force, the policy will still only pay out once per month

Joint life insurance policy is the policy which protects 2 individuals but complete value of policy will be paid once only at time of the death of either insurer during the policy term and then the plan would end. Children, spouses or even the business partners can benefit from the life insurance policy. 

A pension plan is designed to generate regular income for individuals once they retire. Insurance companies offer various pension plans (also called as retirement plans) where a person has to initially invest either a lump sum amount or regular annual installments/ premiums over a period of time in return for regular income either for life or for fixed number of years depending, upon the plan.

Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium, to ensure that money is available to pay for the health care benefits specified in the insurance agreement.

It is a contract between an insurance provider (e.g. an insurance company or a government) and an individual or his/her sponsor (e.g. an employer). The contract can be renewable (e.g. annually, monthly). The type and amount of health care costs that will be covered by the health insurance provider are specified in the contract.

It is a type of insurance vehicle in which the policy

holder purchases units at their net asset values and also makes contributions toward another investment vehicle. Unit linked insurance plans allow for the coverage of an insurance policy, and provide the option to invest in any number of qualified investments, such as stock, bonds or mutual funds.

Life insurance ulip plans are particularly useful for people who want a financially secured future. These plans are also useful for those people who cannot afford both investment and insurance at the same time.

One can also avail tax benefits under Section 80C and 10(10D) of the Income Tax Act, 1961. As per current tax laws*, the premium paid is deductible from taxable income for maximum amount of Rs 100,000.

Any kind of insurance not covered under Life insurance comes under the scope of Non-Life insurance or General Insurance. Section 2(6B) of the Insurance Act 1938, defines general insurance business.According to this general insurance business means fire, marine, or miscellaneous insurance whether carried separately or in combination.Basically, Non-life insurance contract is a contract between an insurance policy holder and an isurer where the insurer promises to pay a designated sum of money to cover any loss caused to the property of the insured for which the insurance has been claimed.

Non-Life Insurance

There are in total 16 General Insurance Companies in India and they can be broadly classified into -

Private Sector Undertakings Public sector Undertakings

Market Players

Types of Non-Life Insurance

Fire insurance Marine insurance Health insurance Motor insurance Miscellaneous insurance

Fire Insurance

A contract of fire insurance can be defined as a contract under which one party ( the insurer) agrees for consideration (premium) to indemnify the other party (The insured) for the financial loss which the latter may suffer due to damage to the property insured by fire during a specified period of time and up to an agreed amount.

Scope of cover – Fire Lightening Explosion Natural calamities Bush fire etc

Marine Insurance

Marine insurance is a contract under which, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed, against marine losses, incidental to marine adventures. It may be defined as a form of insurance covering loss or damage to vessels or to cargo during transportation to the high seas.

Types of perils – Insured perils are storm, collision of one ship with another ship,

against rocks, burning and sinking of the ship, spoilage of cargo from sea water,mutiny, piracy or willful destruction of the ship and cargo by the master(captain) of the ship or the crew, jettison etc.

Uninsured perils are regular wear and tear of the vessel, leakage (unless it is caused by an accident), breakage of goods due to bad movement of the ship, damage by rats and loss by delay. All losses and damages caused due to reasons not considered as perils of the sea are not provided insurance cover.

Types of Marine insurance- (a) Hull Insurance Hull refers to the ocean going vessels (ships trawlers etc.) as well as its machinery. The hull insurance also covers the construction risk when the vessel is under construction. A vessel is exposed to many dangers or risks at sea during the voyage. (b) Cargo Insurance Cargo refers to the goods and commodities carried in the ship from one place to another. The cargo transported by sea is also subject to manifold risks at

the port and during the voyage. Cargo insurance covers the shipper of the goods

if the goods are damaged or lost. The cargo policy covers the risks associated with the transshipment of goods. (c) Freight Insurance Freight refers to the fee received for the carriage of goods in the ship. Usually the ship owner and the freight receiver are the same person. Freight can be received in two ways- in advance or after the goods reach the destination. In the former case, freight is secure. In the latter the marine laws say that the freight is payable only when the goods reach the destination port safely. Hence if the ship is destroyed on the way the ship owner will loose the freight along with the ship. That is why, the ship owners purchase freight insurance policy along with the hull policy.

Health Insurance

Health insurance is an insurance, which covers the financial loss arising out of poor health condition or due to permanent disability, which results in loss of income.

The health insurance policies available in India are:

1. Mediclaim policy (individuals and groups)2. Overseas mediclaim policy3. Raj Rajeshwari Mahila Kalyan Yojna4. Bhagyashree Child Welfare Policy5. Cancer Insurance Policy6. Jan Arogya Bima Policy

Motor Insurance

There has been a sudden rise in the motor accidents in the last few years.Much of these are attributable to increase in the number of vehicles. Every vehicle before being driven on roads has to be compulsorily insured. The motor insurance policy represents a combined coverage of the vehicles including accessories, loss or damage to his property or life and the third party coverage.

The risks under motor insurance are of two types:1) Legal liability due to bodily injury, death or damage caused

to the property of others.2) Loss or damage to one’s own vehicle\ injury to or death of

self and other occupants of the vehicle.

Claim settlement in case of motor insurance -

Claim arise when - 1) The insured’s vehicle is damaged or any loss incurred. 2) Any legal liability is incurred for death of or bodily injury 3) Or damage to the third party‘s property.

The claim settlement in India is done by opting for any of the following by the insurance company -

o Replacement or reinstatement of vehicle o Payment of repair charges

In case, the motor vehicle is damaged due to accident it can be repairedand brought back to working condition. If the repair is beyond repair then the insured can claim for total loss or for a new vehicle. It is based on the market value of the vehicle at the time of loss.

Miscellaneous Insurance Fidelity insurance - Under this type of insurance contract the

insurer undertakes to compensate the insured against the loss caused by misappropriation of funds or goods or damage to the property caused by his employees. Such a policy is useful to the employers who fear embezzlement, forgery, fraud and dishonesty on the part of their employees.

Burglary insurance - Such a policy provides protection against loss or damage caused byhousebreaking, robbery or theft. It is also known as ‘robbery, theft or larceny insurance’. For this purpose a comprehensive policy may be taken or each risk may be separately insured. Full details of the article insured are given in the policy.

Credit insurance - Credit insurance policy is taken to cover the loss which may arise due to bad debts or non-payment of dues by the debtors. This insurance is very useful to businessmen who sell goods on credit. It protects them from loss arising out of insolvency of their debtors. In India, Export Credit and Guarantee Corporation (ECGC) provides credit insurance to exporters.

Travel insurance - Travel insurance covers travel related accidents also.While traveling outside India, individuals face risks such as loss of baggage, accidents involving injuries, illnesses and medical emergencies requiring hospitalization treatment. All this can pose serious consequences to the overseas travellers. A rational person should therefore secure the required coverage before leaving his home country. In India travel insurance has become popular among International travellers.

Unemployement insurance - Unemployment insurance is designed to provide short term protection for regularly employed persons who lose their jobs and who are willing and able to work.

Market share

World Market share

The term insurance marketing refers to the marketing of insurance services with the aim to create customer and generate profit through customer satisfaction. The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The marketing includes sub mixes of the 7 Ps of marketing i.e.the product, price, place, promotion, people, process and physical distribution.

services of insurance companies. Customers can get the assistance and advice of the agents, prestige of the insurance company and the facilities of claims and compensation along with the schemes.

The PRICE of insurance is in the form of premium rate. Premium rates are determined based on mortality of a person,expenses and interest.

PLACE is related to the location of the insurance branches. manager considers number of factors to make attention such as smooth accessibility,availability of infrastructural facilities and the management of branch office furnishing, civic amenities and facilities, parking facilities and interior office decoration.

In PROMOTING insurance business the agents and the rural career agents play an important role. As the part of the promotional activities life insurance companies arrange Exhibitions, in establishing Fairs and Festivals and publicity drive through the mobile publicity van units to attract policyholders.

About PEOPLE concern the companies involve a high level of interaction, which is very important to satisfy customers. Training, development and strong relationships with intermediaries are key area to be kept under consideration.

The speed and accuracy of payment is given as great importance in the PROCESS. The process should be easy and convenient to customers.

As the PHYSICAL DISTRIBUTION concern the awareness increases, the product become simpler. Now-a-days the intermediaries are of different types.The remote distribution channels such as telephone or internet are good to decrease overhead charges. Banks are also playing as intermediaries for insurance companies the way of the method is called as bancassurance.

COMMON MARKETING STRATERGIES ADOPTED BY INSURANCE COMPANIES:-

Insurance companies are familiar to the policyholders through television commercials, handling out pamphlets, hanging banners in populated areas by creating exciting offers.

Telephone marketing is one way of life insurance marketing. Insurance companies send messages and make phone calls about various offers through different channels of telephone networks.

The constant contact with the existing customers is helpful to the companies to build brand equity. Generally insurance companies they send messages to thepolicyholders on the occasions of birthdays, anniversaries and festivals.

Life insurance companies can make publicity by undertaking social works and charity works. so that they get publicity through media.

Some life insurance companies used to send dinner coupons to the policyholders occasionally.

Life insurance companies may follow the way of honesty and loyal to build

THANK YOU!