To tap the potential of direct marketing and the Internet to sell insurance products, some insurers in India have suggested that phone recordings and digital signatures be treated as physical documents to confirm a policy.
Currently, Web-based selling and direct marketing are allowed only for very few insurance products here, such as health and vehicle insurance.
Need for change: Currently, Web-based selling is allowed only in products such as vehicle and health insurance
“Internationally, phone recording and digital signatures are used as physical documents. In fact, Web-based selling and telemarketing can be more powerful than face-to-face marketing,” said Anupam Dutta, vice-president of speciality marketing division at Tata AIG Life Insurance Co. Ltd.
One of the main recommendations of the distribution channels committee, constituted last year by the Insurance Regulatory and Development Authority (Irda), is to permit direct marketing and Web-based selling for all insurance products after a customer submits a written confirmation. The committee submitted its report to Irda last week.
The country’s insurance sector regulator set up the committee on 21 September 2007, headed by M.N. Govardhan, former chairman of state-run insurer Life Insurance Corp. of India.
“We believe in the potential of direct marketing and also the Web,” said Anjana Grewal, senior vice-president of marketing and communication at Birla Sun Life Insurance Co. Ltd. “The recommendations of the committee will indeed have a significant impact on the sector,” she added.
On his part, Rahul Aggarwal of Optima Risk Management Services Pvt. Ltd, a New-Delhi-based insurance broker, said the report failed to address crucial issues related to sub-broking. “Currently, we are not allowed to do sub-broking. But the practice is very much rampant here,” he said.
Aggarwal, however, welcomed a recommendation to reduce the capital required for a corporate agent from Rs15 lakh to Rs1 lakh. “Other than banks, there are very few corporate agents in India. A few years ago, when the current limit of Rs15 lakh was introduced, many existing corporate agents opted to become brokers. The reduction in capital to Rs1 lakh will give individual agents an opportunity to expand their business.”
The committee has also suggested that the regulator introduce separate definitions for retail general insurance agents and other general insurance agents.
S. Narayanan, chief executive of Iffco-Tokio General Insurance Co. Ltd, however, said that these new definitions will not make procedures simple. He said allowing any agent to act for more than one insurer is inconsistent with long-established practices.
The report also said that since distribution costs are higher in rural markets, limited pay or single-pay products should have higher commissions. In addition, it said pre-recruitment training should be left to insurance firms, keeping in view the general guideline of 50 hours of training.
“Flexibility in pre-recruitment training can make the process administratively easy, especially in less urban areas,” said Sanjay Jain, marketing head of Bajaj Allianz Life Insurance Co. Ltd.