Chapter 11 - The General Business Environment Flashcards
What are the various distribution channels
- Insurance intermediaries - select products for their client from all or most of those available on the market
- Tied agents - who offer the products of one life insurance company or a small number of life insurance companies
- Own sales force - usually employed by a particular company to sell its products direct to the public
- Direct marketing via press advertising, over the telephone, internet or mailshots
What are the key risks to the insurance company when a policy is sold which does not meet the needs of a policyholder
- Persistency risk and consequent financial losses
- Reputational risk
What form does direct marketing take
- Mailshots
- Telephone
- Press advertising
- internet selling
Why business from intermediaries is likely to be subject to most underwriting
Intermediaries are representing the interests of their clients, not a particular insurance company.
The company needs to be aware of the possibility that an intermediary might encourage anti-selection
They also are likely to have customers of high net worth, with consequent need for higher insurance cover
Why is having competitive rates or charges not the be-all and end-all for every product, even when selling through intermediaries
ICIC
- products may be differentiated through INNOVATIVE features or attractive options
- more complex products may be difficult to COMPARE across companies
- some savings contracts may compete as much on past INVESTMENT performance as on premium rates or charges
- some products may compete on the level of CUSTOMER service or admin support