CH 11 (Distribution Channels) Flashcards
1
Q
Reasons for Consumers Avoiding Insurance
A
- Distant need which people aren’t as aware of
(ignorance or
“won’t happen to them”) - Taboo subject
- Difficult to understand
- Difficult market place
(many providers makes it tough to know which is best)
-Need for advice with LT financial commitments
= time-consuming
2
Q
Driving forces behind sales
A
- Genuine needs (inbound)
- Selling force (outbound)
3
Q
Types of Channels
A
- Independent intermediaries (aka brokers/independent financial advisers) - Tied agents - Own sales force - Direct marketing
4
Q
Effect of Distribution Channel
A
DUCCC
[M(ILF)W]
- Demographic profile
> customer Mortality and Withdrawal profile
» Financial sophistication
» Interest/keenness in taking up product
» Levels of income - level of Underwriting
(will also affect demographic profile) - Complexity of product
- need for Competitive terms
(amount of competition) - Commission costs (and thus price)
5
Q
Key Insurer Risks from Mis-selling
A
- Persistency risk
- Reputational risk
- New business risk
6
Q
Forms of Direct Marketing
A
- Mailshots
- Telephone selling
- Press advertising
- Internet selling
7
Q
Aspects to Describing Sales Channel
A
WRIM
- Who initiates the sale
- Remuneration method
- Independence
- Medium