Insurers try novel distribution models

With most banks starting their own insurance companies, life insurers have been forced to explore alternative models through which they can sell products.  Apart from roping in India Post, life insurers are exploring online selling, tying up with non-banking financial companies (NBFCs) and even stem-cell banks and rural digital networks, among others.

“We are in talks with at least three NBFCs for distribution of our products. NBFCs deal with a large number of customers with unsecured loans at high interest rates and these people need protection,” said Gerhard Joubert, CEO (north, east and west), at Shriram Life Insurance.

Max New York Life Insurance has tied up with stem-cell bank LifeCell, which preserves the umbilical cord of a child during birth to treat any disease that may affect the child in future.

How did the company come up with this idea? V Viswanand, director and head — bancassurance & distribution at Max New York Life, said, “Insurance is purchased at specific stages in life and one of them is the birth of the child. We looked out in other Asian countries and saw that in Taiwan one out of four parents register for stem-cell banking. When parents are seeking a biological insurance for their child then they might even be willing for a financial cover too.”

Talking about the strategy, he said, “Customers who go for stem-cell banking are high-networth customers. Two months after the parents register for LifeCell, our in-house advisors approach them. The response so far has been good. The convergence rate is 1:3.”

DNA Money has learnt that many insurers are also trying to rope in chartered accountants as corporate agents to distribute their products. “They have a very strong relationship with their clients for their financial needs, which can benefit us,” said a chief marketing officer at a life insurance company, not willing to be named.

While the above distribution models are focused on urban areas, collaborations have been made for inroads into rural India as well.  Companies such as Life Insurance Corporation, ICICI Prudential Life Insurance and ING Vysya Life Insurance have tied-up with Suvidhaa Infoserve, which runs 13,000 kirana stores that provides grocery, mobile and telephone services, pharmacy products, internet and travel services to customers in 400-odd locations.

The tie-up allows a policyholder to pay his premium at the store, where the store owner will punch details into a kiosk to generate a payment receipt. DLF Pramerica Life Insurance has partnered with Srei Sahaj E-Village, an arm of Srei Infrastructure Finance, to reach out to 27,000 villages, while Max New York Life has tied up with Kisan Seva Kendras run by Indian Oil Corporation in rural areas.

Insurers are also trying to sell select products through websites such as policybazaar.com. Life Insurance Corporation of India and SBI Life Insurance have tried selling term life and unit-linked insurance products through the online aggregator.

Even as insurers mull various tie-ups outside the banking space, they are still pegging their hopes on the bancassurance channel. They are expecting a nod from the Insurance Regulatory & Development Authority permitting one bank to sell more than one insurer’s products.