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

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2
Q

Driving forces behind sales

A
  • Genuine needs (inbound)

- Selling force (outbound)

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3
Q

Types of Channels

A
- Independent intermediaries
(aka brokers/independent financial advisers)
- Tied agents
- Own sales force
- Direct marketing
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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)
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5
Q

Key Insurer Risks from Mis-selling

A
  • Persistency risk
  • Reputational risk
  • New business risk
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6
Q

Forms of Direct Marketing

A
  • Mailshots
  • Telephone selling
  • Press advertising
  • Internet selling
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7
Q

Aspects to Describing Sales Channel

A

WRIM

  • Who initiates the sale
  • Remuneration method
  • Independence
  • Medium
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