Distribution Channels

Question 1

What is a marketing mix?

Answer 1

Product, price, promotion and place.

Question 2

What is a direct marketing channel?

Answer 2

Employees of the insurer sell the insurance products or use direct mailing techniques to promote sales.

Question 3

What is an indirect marketing channel?

Answer 3

Intermediaries are paid by the insurer to promote products on the insurers behalf.

Question 4

Benefits of direct marketing?

Answer 4

• Reduced costs for insurers as they are not paying intermediaries
• Customers can purchase insurers quicker/easier as immediate cover can be obtained over the internet/phone

Question 5

Drawbacks of direct marketing?

Answer 5

• Only one company product is avliable unless customer makes mutliple calls or reviews qoutes on a comparison website
• No independent advice is avaliable for the customer

Question 6

What are delegated authority schemes?

Answer 6

Insurers may delegate some of their authority to intermediaries to act on their behalf - i.e. issuing a motor cover note book which means the intermediary is authorised to issue cover provided new business or changes to existing policies fall within a set critera.

Question 7

What are “binders”?

Answer 7

Delegated authority schemes which are particularly flexible for intermediaries (i.e. policy wordings will have be specially negotiated to fit a particular category of client such as hoteliers)

Question 8

What is a Managing General Agent?

Answer 8

Special intermediary who has delegated authority to act for more than one insurer - offer specialist knowledge in niche areas.

Question 9

What is bancassurance?

Answer 9

Arrangement between a bank and insurance company where insurance products are sold to the banks customers.

Question 10

Benefits of bancassurance?

Answer 10

• Acess to each others “scale of efficencies” (i.e. their large customer base)
• Oppertunity to develop products together
• Improving value chain efficency (i.e. making the most of product development)