Regulators the world over are coming down hard on companies selling insurance through unsolicited phone calls, yet telephone retailing appears to have a bright future in insurance. According to management consultancy firm Watson Wyatt which specializes in the insurance business, direct marketing through telephones is turning out to be the third largest alternate channel for insurance companies.
“In the UK and Australia, telemarketing and the Internet are the dominant channel for distributing non-life insurance products. Telemarketing is already significant for some companies in Asia and there is rapidly growing interest in this channel,” said John O’Rorke managing director, distribution consulting practice, Watson Wyatt. According to Mr O’Rorke, companies are looking at in-bound customer calls to sell insurance in many markets. He added that companies would either run an advertising campaign inviting callers to phone in or they would attempt to cross-sell to customers who had called in with some other inquiry.
In countries such as Korea, telemarketing, as a channel, is the mainstay of distribution for personal lines. And today, the law in that country recognizes recorded acceptances. Telemarketing is not a new concept in insurance. It was introduced way back in 1984 by UK non-life insurer Direct Line, which was built around the concept that insurance could be profitably sold through telephone. In India, newly-formed Star Health and Allied Insurance has started selling its products through telemarketing.
For insurance companies, which have traditionally been selling their products through agents, any other sales channel is described as an alternate channel. Among the alternate channels, bancassurance is the most dominant followed by telemarketing. However, banks themselves are using telemarketing to sell to their customers.
According to R Krishnamurthy, MD (distribution consulting), Watson Wyatt, some of the banks in India that are entering insurance business are looking at combining their sales force with insurance arms to create telemarketing teams. Although there is a regulatory requirement that every individual who sells insurance needs to go through the 100 hours of training stipulated by IRDA, banks have made representation to ease this requirement for bank employees selling standard products, he said.
Banks are better placed to engage in telemarketing because of the quality of data they have, coupled with the relationship of trust. It is because of this that banks have been more successful than retailers and departmental stores who started out trying to sell through the shop-in-shop route, but are now engaging in to selling to their loyalty card base.
Among private insurers, there are four companies which have a telecom company within their groups. However, the quality of data possessed by telecom companies is not all that good. It is, therefore, not possible to achieve segmented selling. At the same time, most of the mobile owners in India are pre-paid subscribers, which makes billing difficult.
Source : economictimes.indiatimes.com
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