Chapter 8: Distribution Channels

Question 1

What are the main distribution channels?

Answer 1

1. Independent intermediaries
2. Tied agents
3. Own sales force
4. Direct marketing

Question 2

What are the main types of direct marketing?

Answer 2

1. Mailshots
2. Newspapers (Press)
3. Telephone
4. Internet

Question 3

What are the disadvantages of a intermediary for group products?

Answer 3

1. Insurer is unable to:
    build a relationship with the client as they have no direct communication with the client.
    Influence persistency through service (except to affect brokers’ decisions to use the insurer)
    influence risk attitude and risk management of employer
   * Thus, insurer can’t control claims cost (e.g. safety at work) outside of T&Cs of contract
2. Broker not loyal to insurer

Question 4

What are the advantages of group products to the employer?

Answer 4

 Guaranteed a good level of service, comparative analysis of the market on price, products and quality of administration

Question 5

What are the advantages of group products to the employer?