Modes of Selling Insurance:

Direct Selling

In this mode the sales professional is approaching the end user directly to sell the life
insurance policy. To identify clients, sales professional knocks the market & hunts his
customers.

Tied Agency:
As from the term you can judge that in this mode the professional is required to create an
Agency from which companies product can be promoted. Here Agency indicates an
individual who can work for the insurance organization without being an employee of
that particular organization & promote product of the organization.Here the Sales
Professional is required to make a team of potential Advisors/Agents under him &
generate sales through these Advisors/Agents

Banc assurance/ Mall assurance/ Tele assurance:

In this mode the nature of the Parent organization is either of Banking, Mall or
Telecommunication background. For example say ICICI Prudential Life Insurance Co
is a tie up between ICICI Bank & Prudential Life Insurance Co.

Corporate sales

Here the sales professional approaches the Corporate organization, give presentation to
the corporate employees & thus promotes the products.For eg. Group Insurance (Term
Life):In this mode of sales, basic motive is to promote Term Life policies &
Retirement plans of the organization. You would have seen in many organizations that
the employers insure their employees. So in this channel of sales the basic need is to
convince the employer to take policies for their employees.

Alternate Channel:
In this mode the professionals ties-up with different organizations & through these
organization the product of the company is promoted.

BANCASSURANCE

Definition

The Bank Insurance Model ('BIM'), also sometimes known as 'Bancassurance', is the
term used to describe the partnership or relationship between a bank and an insurance
company whereby the insurance company uses the bank sales channel in order to sell
insurance products.

BIM allows the insurance company to maintain smaller direct sales teams as their
products are sold through the bank to bank customers by bank staff.
Why Bancassurance in India?
basic financial point
The life insurance industry in India has been progressing at a rapid pace since opening up
of the sector in 2000. The size of the country, a diverse set of people combined with
problems of connectivity in rural areas, makes insurance selling in India a very difficult
proposition. Life insurance companies require immense distribution strength and
tremendous manpower to reach out to such a huge customer base. This distribution will
undergo a sea change as various insurance companies are proposing to bring insurance
products into the lives of the common man by making them available at the most basic
financial point, the local bank branch, through Bancassurance. Simply put, bancassurance
is the process through which insurance products are sold to customers at their local
banks. With a banking network of 65,000 branches serving more than 300 million retail
banking customers, insurance can be available at affordable prices to people even in
remote corners of the country.

extensive geographical spread and countrywide customer access

Banks have expertise on the financial needs, saving patterns and life stages of the
customers they serve. Banks also have much lower distribution costs than insurance
companies and thus are the fastest emerging distribution channel. For insurers, tying up
with banks provides extensive geographical spread and countrywide customer access; it
is the logical route for insurers to take.

increase deposits of banks.

Life insurance premium represents 55% of the world insurance premium, and as the life
insurance is basically a saving market. So it is one of the methods to increase deposits of
banks.

efficiency factor
The ratio of expenses to premiums, an important efficiency factor, it is noticed very well
that expenses ratio in insurance activities through bancassurance is extremely low. This is
because the bank and the insurance company is benefiting from the same distribution
channels and people.

marketing and processing capabilities

It is believed that the prospects for increased consolidation between banking and
insurance is more likely dominated and derived by the marketing innovations that are
likely to follow from financial service modernization. Such innovations would include
cross selling of banking, insurance, and brokerage products and services; the increased
use of the Internet by consumers; and a melding of insurance and banking corporate
cultures.
Other bank strengths are their marketing and processing capabilities. Banks have
extensive experience in marketing to both existing customers (for retention and cross
selling) and non-customers (for acquisition and awareness). They also have access to
multiple communications channels, such as statement inserts, direct mail, ATMs,
telemarketing, etc. Banks’ proficiency in using technology has
resulted in improvements in transaction processing and customer service.

The motives behind bancassurance also vary.

• For banks it is a means of product diversification and a source of additional fee
income.
• Insurance companies see bancassurance as a tool for increasing their market
penetration and premium turnover.
• The customer sees bancassurance as a bonanza in terms of reduced price, high
quality product and delivery at doorsteps.
Actually, everybody can be a winner here.

Regulatory issues

The development of bancassurance in India has been slowed down by certain regulatory
barriers, which have only recently been cleared with the passage of the Insurance
(Amendment) Act, 2002. Prior to this, all the directors of a company wishing to take up
corporate agency (such as a bank) were technically required to undertake 100 hours of
agency training and pass an examination. This was clearly an impractical requirement
and had held up the implementation of bancassurance in the country. As the current
legislation places the training and examination requirements upon a designated person
(.the corporate insurance executive.) within the corporate agency, this barrier has
effectively been removed. Other regulatory changes of note in this area are the recently
published Insurance Regulatory and Development Authority (IRDA) regulations relating
to the licensing of corporate agents.
This specifies the institutions that can become corporate agents and sets out the training
and examination requirements for the individuals who will be selling on behalf of the
corporate agent, the so-called .specified persons. .Specified persons. have to satisfy the
same training and examination requirements as insurance agents. A noticeable exception
is that for those possessing the Certified Associateship of Indian Institute of Bankers
(CAIIB) only 50 hours of training (rather than 100 hours) will be required. This also
applies to certified accountants and actuaries. It is hoped that this aspect of the
regulations will lead to well educated, professional bank officers carrying out the
financial advisory process.

Although expected, a restrictive feature of the bancassurance regulations is that they

appear to constrain the corporate agent to receiving only commission; profit-sharing
arrangements would seem to be ruled out. We feel that this, if applied in practice, is
unfortunate as profitsharing agreements, which are increasingly common internationally,
serve to align the interests of the bank and the insurance company. Also, as products sold
through bank channels can be highly profitable, such agreements may be financially
advantageous for banks. In the longer term a profit-sharing agreement can help a bank
move from being a distributor to a manufacturer of insurance products thus leading to
greater integration in the financial services marketplace.