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The project describes Marketing is one of the most important expect that help any
product to develop and same is the case for Insurance sector and their product. Insurance
is a basically a service which is provided to the people rather then a physical product
therefore it is effected by service marketing. 7 p such as Product mix, Price mix, Place
mix, Physical evidence, People mix, Process mix, Promotion mix are used by insurance
to sell insurance products
A product mix is the set of all products and items that a particular seller
offers for sale. In case of insurance sector, the product mix comprises of Life and
Non – life insurance policies that are offered to the customer by the company.
Thus market segmentation is the process that segments a market into smaller sub-
markets called segments. Segments are homogeneous within and desirably
heterogeneous in between. The rationale of intra-group homogeneity is that
people with similar attributes are likely to respond somewhat similarly to a given
marketing strategy
Insurance companies will continue to face increased competition from
banks and securities firms entering the insurance markets. As more of these firms
begin to sell insurance policies, increasing numbers of insurance sales agents will
be employed in them, rather than in insurance companies.



Insurance, in law and economics, is a form of risk management primarily used to

hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer
of the risk of a loss, from one entity to another, in exchange for a premium. Insurer is the
company that sells the insurance. Insurance rate is a factor used to determine the amount,
called the premium, to be charged for a certain amount of insurance coverage. Risk
management, the practice of appraising and controlling risk, has evolved as a discrete
field of study and practice.

Security has always been a universal desire, right from the earliest civilizations.
This quest for security has been a major motivating force in the progress of mankind. The
early societies looked up to their families for providing this security, which resulted in
cohesive units. Gradually, as lifestyles changed and as man progressed into a more
modern industrialized setup, this cohesive quality of the family started fading. One had to
look for other ways of providing economic security and somewhere along the line was
born insurance.



Ask individuals wanting to buy life insurance, about how they do their tax
planning and the first reply will be - insurance policy. Such is the nature of life
insurance. It is bought by almost everyone right from the bigwigs of the business
world to small retail investors. And most buy it for one core reason - to save tax.
But this is not the only reason.

• Fear of passing away early:

One is never sure about life. We often come across people claiming that
nothing is going to happen to them; that they are too young to pass away. But do
they really know what the future holds for them? We can assure you they don't,
because the question `What if?' has probably never crossed their minds. We only
have to read newspaper headlines about the Tsunami, the earthquake that took
place and such other natural calamities to understand how the future can be
Individuals need to insure themselves to secure the future of those who are
dependant on them; especially so if they happen to be the sole breadwinners. You
wouldn't want them to go through hardships or rely on others/relatives, etc. This,
in fact, is the prime reason why one should buy an insurance policy.

• Living too long:

Advances in the field of medicine have grown by leaps and bounds over
the past few decades. Due to this, life expectancies have gone up. This poses
another problem for individuals. It is generally observed that individuals who
tend to live way beyond their earning years like say, till the age of 85 or 90,
usually face a problem coming to terms with increasing costs of living.


• Painful Existence:
Maybe an individual has planned well during his earning years to secure
himself financially. He has also designed his financial portfolio in such a way that
he is drawing a comfortable monthly income to support his family expenditure.
But what if an individual were to have a health problem afflicting him or his
spouse? What if the remedy to this ailment were to cost him a sum beyond his
financial capacity? Here again, life insurance can act as the saving grace in two
ways. One, by way of a medical rider like the accidental death benefit rider,
permanent disability benefit rider, critical illness benefit rider. These riders are
taken along with the life insurance plan and help cover the medical expenses.

• Tax benefits:
Do we need to elaborate on this any further? Traditionally, life insurance
has always been bought more for tax benefits than for what
it is actually purported to do; i.e. insure human life. But the role of life
insurance in an individual's tax planning cannot, in any way, be undermined.
Under the new regime, individuals can now invest up to Rs 100,000 in insurance
premium to avail of a deduction from taxable income. The tax sops provided on
insurance help `increase' the individual's disposable income and make him
consider taking a life insurance plan which he otherwise may not have done.

• Investment:
The other major persons who invest in Insurance are those who have
earned good money in their young age and want to invest in some safe investment
scheme which also provides additional benefits like life insurance cover and
pension benefits at later stages of life.




a) Providing Protection:
The primary function of insurance is to provide protection against future
risk, accidents and uncertainty. Insurance cannot check the happening of the risk,
but can certainly provide for the losses of risk. Professor Hopkins observes
"Insurance is a protection against economic loss, by sharing the risk with others.”

b) Collective bearing of risk:

Insurance is a device to share the financial loss of few among many
others. Dinsdale opines, insurance is a mean by which few losses are shared
among longer people. Similarly, William Bevridge observes, "The collective
bearing of risks is insurance." All the insured contribute the premiums towards a
fund and out of which the persons exposed to a particular risk is paid.

c) Assessment of risk:
Insurance determines the probable volume of risk by evaluating various
factors that give rise to risk. Risk is the basis for determining the premium rate

d) Provide certainty:
Insurance is a device which helps to change from uncertainty to
uncertainty. This may the reason that John Magee writes that the function of
insurance is to provide certainty. Similarly, Regal and-Miller observe, "Insurance
is device whereby the uncertain risks may be made more certain".



a)Prevention of losses:
Insurance cautions individuals and businessmen to adopt suitable device to
prevent unfortunate consequences of risk by observing safety instructions;
installation of automatic sparkler or alarm systems, etc. Prevention of losses
causes lesser payment to the assured by the insurer and this will encourage for
more savings by way of premium. Reduced rate of premiums stimulate for more
business and better protection to the insured.

b) Small capital to cover larger risks:

Hinsdale observes, insurance relieves the businessmen from security investments,
by paying small amount of premium against larger risks and uncertainty.

c) Contributes towards the development of larger industries:

Insurance provides development opportunity to those larger industries having
more risks in their setting up. Even the financial institutions may be prepared to
give credit to sick industrial units which have insured their assets including plant
and machinery.



Marketing is one of the most important expect that help any product to develop
and same is the case for Insurance sector and their product. Insurance is a basically a
service which is provided to the people rather then a physical product therefore it is
effected by service marketing.

Almost every marketing textbook has a different definition of the term

“marketing.” The American Marketing Association (AMA) uses the following: “The
process of planning and executing the conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy individual and organizational

Some of the main issues of marketing involved include:

 Marketers help design products, finding out what customers want and what can
practically be made available given technology and price constraints.
 Marketers distribute products there must be some efficient way to get the products
from the factory to the end-consumer.
 Marketers also promote products, and this is perhaps what we tend to think of first
when we think of marketing. Promotion involves advertising and much more.
Other tools to promote products include trade promotion (store sales, coupons,
and rebates), obtain infavorable and visible shelf-space, and obtaining favorable
press coverage.



Marketing of insurance products have become an important activity in the insurance

business. Insurance marketing is found both in the life insurance sector as well as in non-
life insurance sector.

Life Insurance Marketing

An Introduction To Life Insurance Marketing

Life Insurance Marketing is one of the most strenuous jobs for those who are involved in
the insurance marketing.. It is because of the ever lasting conflict between the insurance
companies which want to profit the most and the insured person who wants to get as
much compensation as possible from the insurance company. Commissions for the Life
Insurance companies are very high and they seldom make profits out of the policies. Also
the insurance policy needs to be transparent so that the potential customer understands it
totally and should not feel that they have been treated unfairly by the insurance company.

Reasons For Life Insurance Marketing

The Life insurance companies were paid very little premiums by young children or
healthy people and thus the scope for profit was very small and those who paid high rates
of premium were the older beings who died and the Life insurance companies
compensate for that. However nowadays the Life insurance premiums are almost the
same for an young adult and an old person who just had a major operation.

As the Life Insurance Marketing Companies already deals with this type of a scenario,
what one can do is to change the public perception about the Life insurance companies.
One can connect himself or herself with companies whose workers need a plan for Life
Insurance. One can also go to crowded places and advertise for the Life insurance
company. The Life insurance companies also offer fliers and hanging banners. One can
also offer free Life check in a reputed place to the insured for at least once. One should


always give the life insurance policy holders existing a chance to prefer the marketing
techniques that the insurance company is presenting.
If the policy holder does this at a regular basis then the company has a high chance of

This is making the competition much tougher for the Life insurance companies as most of
the companies offer similar types of premiums and facilities. So it has become very
important for the life insurance companies to concentrate on Life Insurance Marketing
and attract as many people as possible towards their company.

The Life Insurance Companies prefer to go for Group Life Insurance for a group of
people from a particular company or a family so that they get a group of customers and
even if they compensate for some of them for various reasons they usually make it up
with other's premiums. They also get less papers to control and also they provide better
facilities for their clients. So to promote this type of policy they need to have social and
industrial connections. Life Insurance market helps developing that. Even for other
policies like term life insurance and permanent life insurance one needs to be aware of
making people realize the profits of the policy by various means provided by marketing

So before going for a Life Insurance Marketing one actually needs to know the market
target and the desires of the people who are actually seen as potential insurance
customers. The confusion about the way a Life Insurance Marketing conductor can
draw the potential Insurance holder's attention evaporates fast if he knows his targets and
aims clearly. So, it is important to conduct a sound survey and then attract people.


Life Insurance Marketing Strategies

• A very common way to promote a Life insurance company through Life

Insurance Marketing is to make the name of the company familiar to others by means
of television commercials, handling out pamphlets, hanging banners in populated areas
and by providing exciting offers.

• Telephone marketing is another way of Life Insurance Marketing. One can see the
telephone companies send messages about various offers and they even make phone
calls. Web Insurance Marketing is another good strategy to promote insurance policies.
The pop ups that one sees while using Internet are actually a very effective way of
sending messages across the potential insurance customers.

• One should listen to the existing Life Insurance Policy Holders as well as the
potential Life insurance policy holders and listen to what people who actually matters
have to say. One common problem that the insured persons face is that the insurance
companies do not inform its clients about the hike in the premium rates. These things
should be kept in mind. Not only that, a client should be informed about everything
related to his policy and the Life insurance company should keep the transparency as
much as possible.

• Community Life Insurance Marketing is another different way to get

promotion and a high recognition for the Life insurance company. Eminent workers
join local community institutions, such as Chamber of Commerce, and by signing up
there one can help out various projects that take place. These kinds of activities and
social works on behalf of the Life insurance company helps the company to get free
publicity as their names are published in news paper and in media also. Doing charity
works also helps the Life insurance companies to come across various people who act
as volunteers and can act as their potential Life insurance clients. People also like to
deal with like minded people and companies and this is how many deals are made.


• A Life Insurance Company should not charge different Life insurance client
different charges for the same policy. This kind of policy gives the Life insurance
policy holders the feeling that they are being treated unfairly and also that the Life
insurance companies are only looking for profits and not the betterment of customer

• When a Life insurance claim is filed, especially for a very big hefty amount, the
Life insurance company should help out the policy holder in processing out the
paperwork. One should not let bureaucracy enter and make it so difficult for the one
making the claim so that he gives his claim .This has always been a common tactic on
the insurance company's part to avoid paying claims claimed by the policy holder. This
though makes a short term profit for the company but it hurts in the long run as the
reputation of the company is hampered severely.

• People in this Life insurance industry should always try to keep in constant
contact with the existing customers as well. The competition in the insurance market is
so fierce today that no company wants to loose out on a customer to another company.
Clients who are not contacted for a longer period of time normally fail to remain loyal
to the insurance company and look for a different Life insurance company. The
company can keep the records of the client's birthday and days like anniversary and
sent him or her small tokens of love or loyalty at a regular basis. If the company can
afford a little more it can send dinner coupons to the Life insurance policy holder.
These things play a major role and can be considered as an effective Life Insurance
Marketing strategy.

• May be the most crucial thing in insurance marketing is to always speak about
unity and honesty while dealing with a business. A Life Insurance Holder can find so
many frauds in various life insurance companies today, that life insurance customers
are going for products and services which are trustworthy to them. Feeling safe is
about insurances and other things are most important as far as the insurance holder is
concerned. So, if a company remains loyal to its customers it will itself do Life


Insurance Marketing for itself. So, only by remaining loyal to its customers the
company can do a world of good to its reputation and this would in itself bring more
potential Life Insurance Holders to the company, because the customers prefer safety
more than anything else these days.

Health Insurance Marketing

An Introduction To Health Insurance Marketing
Health Insurance Marketing is one of the most difficult jobs in insurance marketing. It is
because of the ever lasting conflict between the insurance companies which want to profit
the most and the insured person who wants to get as much compensation as possible from
the insurance company. Commissions for the health companies are very low and they
very seldom make profits out of health insurance.

Reasons For Health Insurance Marketing

The health insurance companies were paid very little premiums by young children or
healthy people and thus the scope for profit was very small and those who paid high rates
of premium were the older people who often get ill and the health insurance companies
compensate for that. However nowadays the health insurance premiums are almost the
same for a healthy young adult and an old person who just has had a major operation.

As the Health Insurance Marketing Companies already deal with this type of a
scenario,one can have an alternative view of the health insurance companies. One can be
associated with companies whose workers need a plan for health. One can also go to
crowded places and advertise for the health insurance company. For the purpose of
advertisement the health insurance companies offers fliers and hanging banners. They
also offer free health checks in reputed places to the insured. One should always give the
life insurance policy holders, existing or potential, a chance to understand the gifts and
opportunities the insurance company is presenting to make them comfortable and make
them feel that they care for the clients. If this is done regularly by the company then there
are high chances of success in attracting customers on the part of the company.


This has invited tough competition for the health insurance companies as most of the
companies offer similar types of premiums and facilities. So it has become very
important for the life insurance companies to focus on Health Insurance Marketing and
attract as many people as possible towards their company.
It is hence mandatory for one to know about the market target and the desires of the
customers before going for health insurance marketing.
The confusion about the way a Health Insurance Marketing conductor can draw the
potential Insurance holder's attention evaporates fast if he knows his targets and aims
clearly. So, it is important to conduct a survey and then aim at attracting people.

Health Insurance Marketing Strategies

• A very common way to promote a health insurance company through Health

Insurance Marketing is by making the name of the company familiar to others by
means of television commercials, handling out pamphlets, hanging banners in
populated areas and by providing exciting offers.

• Telephone marketing is another way of Health Insurance Marketing. One can see
the telephone companies send messages about various offers and they even make
phone calls. Web Insurance Marketing is another good strategy to promote insurance
policies. The pop ups that one sees while using Internet are actually a very effective
way of sending messages across the potential insurance customers.

• One should listen to the existing Health Insurance Policy Holders as well as the
potential health insurance policy holders and listen to what people who actually
matters have to say. One common problem that the insured persons face is that the
insurance companies do not inform its clients about the hike in the premium rates. This
things should be kept in mind. Not only that a client should be informed everything
related to his policy and the health insurance company should keep the transparency as
much as possible.


• A Health Insurance Company should not charge different health insurance client
different charges for the same policy. . This kind of policy gives the health insurance
policy holders the feeling that they are being treated unfairly and also that the health
insurance companies are only looking for profits and not the betterment of customer

• When a health insurance claim is filed, especially for a very big hefty amount, the
health insurance company should help out the policy holder in processing out the
paperwork. One should not let bureaucracy enter and make it so difficult for the one
making the claim so that he gives his claim .This has always been a common tactics on
the insurance company's part to avoid paying claims claimed by the policy holder. This
though makes a short term profit for the company but it hurts in the long run as the
reputation of the company is hampered severely.

• Community Health Insurance Marketing is another way to get promotion and a

high recognition for the health insurance company. Eminent workers join local
community institutions, such as Chamber of Commerce, and by signing up there one
can help out various projects that take place. These kinds of activities and social works
on behalf of the health insurance company helps the company to get free publicity as
their names are published in news paper and in media also. Doing charity works also
helps the health insurance companies to come across various people who act as
volunteers and can act as their potential health insurance clients. People also like to
deal with like minded persons and companies and this is how many deals are made.

• People in this health insurance industry should always try to keep in constant
contact with the existing customers as well. The competition in the insurance market is
so fierce today that no company wants to loose out on a customer to another company.
Clients who are no contacted for a longish period of time normally fail to remain loyal
to the insurance company and look for a different health insurance company. The
company can keep the records of the client's birthday and days like anniversary and
sent him or her small tokens of love or loyalty at a regular basis. If the company can


afford a little more it can send dinner coupons to the health insurance policy holder.
These things play a major role and can be considered as an effective Health Insurance
Marketing strategy.

Insurance Agency Marketing

The basic of an Insurance Agency Marketing is to increase the impact of an insurance

company's business as much as possible. Insurance Agency Marketing is used to make
the project work and profit as much as possible. Every insurance company has its own
Insurance Agent Marketing budget and the company employs its Insurance Marketing
Agent accordingly. Some choose cheap agencies and some choose Insurance Agency
Marketing who are renowned in the market better known as branded agencies.

Most of the big insurance companies prefer branded agents because the bigger ones have
better resource and better employees than the smaller ones. It is important to choose a
suitable Insurance Agency Marketing because more than anything else the insurance
products would be sold on the basis of its presentation.

Any customer today give special emphasis on proper information. Most of the Insurance
customers or the potential insurance holders are well informed today and that is why
Insurance Agency Marketing should depend mainly on the media that provide
information. So the marketing agency should concentrate on providing information in the
media like news paper , television magazines and through Internet as well. These
Insurance Agency Marketing can also put banners in crowded place so that it attracts
the eyes of the people walking on the road. This is a very easy and cheap way to make
people aware of one's company. Awareness increases trustworthiness and that increases
sales for the insurance company. Another way the Insurance Agency Marketing can go
on which is by employing good salesman who can work as individual agent for the
company. The agent has to be smart and well spoken and he needs to know most of the
things that the insurance company offers.


So, when a company sits to evaluate or choose an Insurance Agency Marketing, the
company actually needs to look at one particular and important aspect. They should look
at the means and results of a particular company and the possibility in them to make the
life insurance company a big success and a brand in itself. In a single sentence, the
insurance company would look the extent of bang it can create in the market.

Insurance Agency Marketing can also be done through committing social works. The
Insurance Agency Marketing can use the brand name of the company in various social
works in the society. This brings them publicity via media and other means. This also
brings the company closer to people who can act as their potential Insurance holders.

Strategies adopted by the players in the market

Gone were the days when the customers were forced to take up the kind of products
whatever coming from LIC's and GIC's stables. But now, the customer has been
portrayed as the king and to his delight, the products are redesigned and customized
suiting his need taking into account his paying capacity and multiple benefits.
Let us look at the strategies adopted by the players in the market.

Shift in the product portfolio

Earlier the entire industry was revolving around investment and savings oriented plans.
As the interest rates are moving southwards, all the players are deliberately focusing on
selling pure risk covers in an effort to capture the new customers. The premium on such
products is low as it covers only the risk aspect and does not factor in investments or
savings. Even the market leader LIC has withdrawn some of the products, which are
positioned, on the assured returns platform. Though the share of the term plans in the
product portfolio is quite negligible, the shift towards the term products is already visible.
Typically a term plan does not provide anything by way of maturity, unlike moneyback


or endowment policies. Globally, close to a third of the policies fall into this category
must be an encouraging news to the players.
Unit linked products are also gaining momentum in this country. Om Kotak and Birla
Sun Life have launched unit linked schemes focusing on equity, debt and gilt edged
stocks. These schemes are expected to yield better returns when compared to normal
insurance schemes. As the awareness level about these unique products is much lower,
the companies resort to educate the customers about the salient features of the products.

Value For Money (VFM)

The sea change since the sector opened up has been on the way the basic products have
been packaged innovatively, often tailor made to provide a bundle of benefits to the
customers. This is possible through the introduction of riders, which have added value to
the risk cover at minima Riders are nothing but add-ons coming along with the base
policies for a slightly additional premium. Riders have become the major instruments for
the organizations to lure the customers away from the competitors.

Tapping the Niche Markets

Private insurers are concentrating much on designing attractive products by investing
heavily on research, studying life expectancy and health statistics across age groups,
income levels, professionals and regions on their own instead of relying on data with
state insurers. The products are designed with a technical team of actuaries and a product
development team working closely together to target the niche market. The innovations
for the niche markets are abound and to name a few…..

* MetLife India Insurance Company has recently launched a Charitable Trust Policy in
Kolkata, which has evoked a lot of interest especially among the Marwaris business
community who want to set up a temple in their name after their death. Similarly a Buy &
Sell Agreement cover from the same company permits a business enterprise to take out a
life plan on each of its partners, to ensure that the company continues.


* The other segments, which have attracted almost all the players, are the women and the
children segments. Though the State insurer has had a chunk of products sufficiently for
a longer time, it faces stiff competition from the private players in these segments.

Thrust to the rural markets

Thanks to the norms stipulated by the regulator IRDA, all the players have turned their
eyes towards the rural market. Towards ensuring equitable distribution of insurance
policies in every nook and cranny of the country, IRDA stipulates the rural obligations to
be met by the players over the years.

The rural obligation on part of the new private insurance companies is incremental in
nature. It goes from 5% to 15% over the period of 5 years for life insurance and from 2%
to 5% in case of general insurance.

Cause Related Marketing (CRM)

Cause Related Marketing has become the order of the day in Insurance industry. By
creating a goodwill about the organizations, the insurers are making an attempt to
change the negative attitude of the people towards insurance products. For instance,

* Towards serving the society in a better way, LIC has adopted a novel way through
its Bima Grams policy. Accordingly, LIC pays 25% of the premium collected from
the villagers or Rs.25000 whichever is lesser for undertaking developmental work in
the villages provided,
The population of the village is between 1000 and 5000
Life insurance coverage for atleast one person in 75% of the households


List of Private Players & Their Strategies

Name of
No. Profile Strategies
the Player
hyperlinks on and
Number of Policies; call centers.
Sold: 12,757
Special training module - Better
ICICI Distribution Mode:
1. Prospecting Selling - for agents.
Prudential 2,000 agents in six
Cross-selling across all ICICI
personal finance products and
Number of Products: 5
tapping the ICICI customer base
Integration with Sundaram
Number of Policies
Finance products like home and
Sold: 1,227
car loans.
Distribution Mode:
Pick up services in case of
Royal Alliance with 4 banks;
2. accident for motor insurance
Sundaram 105 Sundaram Finance
clients planned.
centers; 50 agents
Road shows and consumer
Number of Products: 65
awareness workshops for
(including variants)
Sundaram Finance customers.
Number of Policies
Direct mailers; call-centres
Sold: 6,178 (general)
accessible from 60 centres.
1,688 (life)
Awareness workshop in housing
Distribution Mode:
3. Tata AIG societies.
3,000 agents in eight
15-day 'trial' period with refund;
premium payment through credit
Number of Products: 5
(non-life) 3 (life)
Ten-day free-look period with
Number of Policies refund in the case of
Sold: 6,996 dissatisfaction.
Distribution Mode: In-house training of agents at
Max New
4. 1,400 agents in nine nine centres run by New York
York Life
centres Life.
Number of Products: 5, Special discount for women;
with 7 riders premium receipts issued on the
20 Corporate agents through HDFC
Number of Policies
and HDFC Bank planned.
Sold: 1,629


The Insurance sector plays a vital role in the economic development of our nation. It acts
as a mobiliser of savings, financial intermediary, promoter of investment activities,
stabiliser of financial markets and a risk manager. India is still an under-insured country
in the world. It is at the 18th position among Life Insurance markets and 28th in Non-Life
Insurance markets in the world. This indicates that there is a huge potential, yet to be


Marketing strategies for insurance in the emerging scenario could be understood in terms
of the following steps:
R >>>>>> STP>>>>>MM>>I>>>> C
Here, R = Market Research
STP = Segmentation, targeting, positioning


MM = Marketing Mix
I = Implementation
C = Control
Having done market research and finalising on segmentation, targeting and positioning
the strategy would focus on the marketing mix namely, Product, Price, Place and
Promotion. While determining the implementation methodology, the four characteristics
viz. Intangibility, Inseparability, Perishability and Variability gives rise to certain unique
requirements that deserve careful attention while formulating the marketing strategy for
insurance. After implementation, the insurers should concentrate on the effective control
that would enhance their business.
In India Insurance is sold and not bought. The agents / Advisors by using various
strategies sell the product by convencing the customers. Moreover, they push Policies
with the highest premium to pocket a higher commission. The consultative approach to
selling is the modern approach, which helps customers and prospects to buy. A consultant
makes calls and sells just like any other sales person. The difference is in their attitude,
their approach and their commitment. Here, the customer is seen as a person to be served
and not a person to be sold. It helps the purchaser to make an intelligent decision. The
four-step process includes:
*Need discovery
* Selection of the product
* Need satisfaction presentation, and
* Serving the sale
This approach to selling their products requires understanding of concepts and principles
borrowed from the fields of psychology, communications, and sociology and needs a lot
of personal commitments and self – discipline from the seller.
The commitments referred are:

• Finding and understanding the needs of the customers.

• Partnering with the customers.


• Helping the customers to achieve his business and other objectives by the
purchase of the product or service.
• Believing that your products / services are a great fit with your customer’s needs,
• Believing in yourself and your ability to help the customers in solving their

A consultant is willing to forego short-term gains to achieve greater long – term benefit
to him and to the customers he serves. He builds relationships on a foundation of trust,
respect and performance. Moreover, consultants don’t sell – they’re specialists who make
recommendations to help the prospect to buy. They act as a professional and offer real–
world solutions that make sense to the customer. Today, the insurers adopt this technique
and thereby go on increasing their market share.


The 7P’s of service marketing will be discussed below in respect of

Insurance sector and their product. The 7P’s of service marketing are:

 Product mix

 Price mix

 Place mix

 Physical evidence


 People mix

 Process mix

 Promotion mix

Product Mix
A product is anything that can be offered to a market to satisfy a want or a
need. A product mix is the set of all products and items that a particular seller
offers for sale. In case of insurance sector, the product mix comprises of Life and
Non – life insurance policies that are offered to the customer by the company. A
company’s product mix has certain width, length and depth.

 The Width of a product mix:

It refers to how many different product lines are available. In case of
insurance sector, there are generally three different product lines i.e. Life
Insurance, Marine Insurance and Fire Insurance.
Life Insurance:
Life insurance is a financial resource for your family and loved ones in
case of your death. It is a contract between you and an insurance company in
which the company provides your beneficiary with a certain amount of money


upon your death. In return, you make periodic payments (premiums) in an

amount that depends on medical history, age, gender, and occupation.
General Insurance:
The term general insurance essentially applies to the insurance risk that is
not life insurance or health insurance risk and so the term covers familiar forms of
personal insurance motor vehicle insurance, fire insurance and travel insurance.




Whole Life Policy Fire Insurance

Limited Payment Life

Marine Insurance

Convertible Whole Life Policy

Motor Insurance
Joint Life Endowment Policy

Double Endowment Policy Business Risk

Jeevan Saathi

Burglary Insurance
Money Back Policy

Annuity Plans

Group Insurance Policy

Bima Sandesh

With or Without Profit Policy, etc.


 The depth of a product mix:

Various products and their different types. In the insurance sector, one
policy can be made available in different variations. Some of the examples are as
Life Insurance:

Whole Life Insurance

Whole Life with Profit Limited Payment Whole Single Premium Whole
Policy Life Policy Life Policy

These product mix dimensions permit the company to expand its business.
E.g.: It can add new product lines thus widening its product mix.
Product Mix of LIC:
(Product Width)

Individual plan Group scheme Pension plan

(Product Length)

Whole life scheme Periodic money Jeevan

Term assurance plan back plan Jeevan Akshay
Joint life investment plan
Capital market linked plan


The insurance companies also provide loan facilities against their policies.
At present loans are granted on unencumbered polices as follows:
• Up to 90% of the Surrender Value for policies, where the premium due is
fully paid-up, and
• Up to 85% of the Surrender Value for policies where the premium due is
partly paid-up.

The minimum amount for which a loan can be granted under a policy is
Rs150. The rate of interest charged is 10.5% p.a., payable half-yearly. Loans are
not granted for a period shorter than six months, or on the security of lost policies
(the assured must have the duplicate policies) or on policies issued under certain
plans. Certain types of policies are, however, without loan facility.


Price Mix
Price is one element in the marketing mix that produces revenue; all the
other elements produce costs. Prices are easiest marketing mix elements to adjust;
product features, channels and even promotion take more time. Price also
communicates to the market the company’s intended value positioning of its
product or brand.

In the insurance business, the pricing decisions are concerned with the
premium charged against the policies, interest charged for defaulting the payment
of premiums & credit facilities, commission charged for underwriting &
consultancy services.

Premiums are the periodic payments usually monthly or quarterly that the
policy holder pays to the insurance company to purchase and keep a policy in

For example in case of life insurance according to the policy it may be the
amount payable during the endowment term of the policy or until the death of the
life assured whichever is earlier.
The common query raised by clients with their insurance agent is – why
does his insurance company charge more premium for the same cover and tenure?
We have tried to address this query below.

Insurance is essentially a matter of sharing risk. A thousand people

contribute a certain fixed amount (i.e. premium) and in future if something were
to go wrong with any of the mass contributors, the lump sum collected as
premiums is used to compensate for the loss.


The basis on which the insurance company decides the amount of premium to be
paid by each person is determined mainly by 3 factors:

Mortality Tables:
All insurance companies refer to different mortality tables. These tables
differ from country to country. The mortality table indicates the probability of a
person dying in a particular age group. For e.g. in an age group of 25-30 years,
the probability might be just two, but this probability would increase for a higher
age group of 45-50 years.

Life Insurance Company (LIC) with its long-standing presence has a

mortality table, which is grossly outdated. Some other insurance companies have
got their own tables but they are more or less in line with that of LIC.

Expected Surplus:
The premiums collected by the insurer are invested in capital markets.
There is a fixed investment pattern for the insurer. Out of the surplus earned on
the premiums invested, 95% is distributed to the policyholders and the insurance
company retains the balance 5%.
If an insurer expects to earn more return on his investment then he would charge
more premiums to his investor. It also depends on the nature of return
(compounded or simple) the insurer is planning to give to his policyholders. A
compounded return would mean higher premium for the life to be assured.

An insurance company has to incur expenses in the form of commission
to agents, office expense, advertising expense, salaries to employees. These
expenses are to be managed by the company in the 5% surplus earning which
they earn as mentioned above. In order to meet the above expenses the insurer has


to collect more premiums so that there is more surplus from which expenses can
be met.

Place Mix
Place mix can be defined as the “Physical distribution i.e. the delivery of
goods/ services at the right time at the right place to the customers.” Place
decisions involve building relationships with the wholesalers, retailers and
through these intermediaries building relationships with the customers. Products
and services must be at the right place, at the right time in order to be consumed.
Probably the best way to perceive place is to think of the flow of products from
manufacturer through intermediaries to the consumer or user. This flow can be
thought of as a channel used to move goods and services.

Distribution channels:
The distribution channels are as follows:
According to Philip Kotler, “Channels are sets of interdependent
organizations involved in the process of making the product or service available
for use or consumption” Marketing channel decisions are among the most critical
decisions facing the management.”

The channels chosen intimately affect all the other marketing decision
In case of insurance sector, the following channel of distribution is followed
according to the target market:


Direct Selling  Agents
 Financial Advisors
 Call Centers
Partner Selling  Bancassurance
 Postal Department
 Selling through Corporate

Direct Selling:
• Agents:
The agents are selected and recruited by the development officer of the insurance
company. These agents inform the customers about the various insurance policies
offered by the company and convince them to buy these policies.

• Financial Advisors:
The financial advisors are also consulted by the customers regarding their
financial matters. These advisors suggest their clients to get their goods insured
against any calamity or risk. Hence they act as a channel in distribution of

• Call centers:
The people who require insurance call up the call centers. These call centers send
their direct marketing agents who go to the customer’s place and sell the
insurance policy.
• Bancassurance:
With the evolution of interconnected financial services, banks are converting
themselves into ‘one stop financial supermarkets’. This has promoted two big
classes of financial institutions: banks and insurance companies to combine and


deliver an innovative product i.e. Bancassurance. In bancassurance, the insurance

products are sold through the banks network of branches.

• Postal Department:
India has an extremely well developed postal network, which is even stronger
than the network of banks in the country. Post offices have been established even
in the interior parts of the country. Insurance companies can tie up with the postal
department to sell and distribute various insurance covers. This would certainly
require upfront training costs, as the postal employees in turn need to educate and
sell the concept and benefits of insurance to the people in rural areas. Such a tie
up with the postal department would open up India’s rural areas, which are
largely untapped for insurance sector. This can prove to be a sustainable source of
growing revenues.

• Selling Through Corporates:

Insurance can be sold through corporates too.
E.g.: When a customer purchases a Maruti car, he gets the insurance of the car
free from the Maruti Company itself. Thus this is termed as selling insurance
through corporates.


Physical Evidence
Physical evidence is the environment in which the service is delivered and
where the company and the customers interact and any tangible goods that
facilitate the performance and communication of the service. Services are
intangible and heterogeneous. Intangibility means that services cannot be
displayed, physically demonstrated or illustrated; heterogeneity means that
consumers cannot be certain about performance on any given day. It plays a
major role in enhancing customers’ perception of the service quality.

However, in case of insurance sector, the customer rarely visits the

insurance company. The customer comes mostly only in contact with the service
Insurance Tangibles as Physical
Service Evidences
1 Policy Documents
2 Brochures
3 Periodic Statements
4 Renewal Notices
5 Business Cards
6 Stationary
7 Calendar, Diaries
8 Letters/Cards
9 Website

People Mix
• Employees:


Employees are very crucial because:

They are the service
They are the brand
They are the marketers
They are the organization in the eyes of the customers.
The various employees involved in providing service to the customer in insurance
sector are:

• Customer service representatives:

They, process insurance policy applications, changes, and cancellations.
They review applications for completeness, compile data on policy changes,
and verify the accuracy of insurance company records. They may also process
claims and sell new policies to existing clients. Nowadays, these workers are
taking on increased responsibilities in insurance offices, such as handling most
of the continuing contact with clients.

• Marketing and sales managers:

These constitute the majority of managers in carriers’ local sales offices
and in the insurance sales agents segment. These employees sell insurance
products, work with clients, and supervise staff. Other managers who work in
their companies' home offices are in charge of functions such as actuarial
calculations, policy issuance, accounting, and investments.

• Claims adjusters, appraisers, examiners, and investigators:

Claims adjusters work for property and liability insurance carriers or for
independent adjusting firms. They inspect property damage, estimate how much it
will cost to repair, and determine the extent of the insurance company’s liability;
in some cases, they may help the claimant receive assistance quickly in order to
prevent further damage and begin repairs. Adjusters plan and schedule the work


required to process claims, which may include interviewing the claimant and
witnesses and consulting police and hospital records. In some property-casualty
companies, claims adjusters are called claims examiners, but in other companies,
a claims examiner’s primary job is to review claims to ensure that proper
guidelines have been followed.

Insurance investigators handle claims in which companies suspect

fraudulent or criminal activity, such as suspicious fires, questionable workers’
disability claims, difficult-to-explain accidents, and dubious medical treatment.
Investigators usually perform database searches on suspects to determine whether
they have a history of attempted or successful insurance fraud.

• Underwriters:
Underwriting is another important management and business and financial
occupation in insurance. Underwriters evaluate insurance applications to
determine the risk involved in issuing a policy. They decide whether to accept or
reject an application, and they determine the appropriate premium for each

• Insurance sales agents:

About 15 percent of wage and salary employees in the industry are sales workers,
selling policies to individuals and businesses. Insurance sales agents, also referred
to as producers, may work as exclusive agents, or captive agents, selling for one
company, or as independent agents selling for several companies. Through
regular contact with clients, agents are able to update coverage, assist with
claims, ensure customer satisfaction, and obtain referrals. Insurance sales agents
may sell many types of insurance, including life, annuities, property-casualty,
health, and disability insurance. Many insurance sales agents are involved in


“cross-selling” or “total account development,” which means that, besides

offering insurance, they have become licensed to sell mutual funds, annuities, and
other securities.

• Lawyers:
The insurance industry employs relatively few people in professional or related
occupations, but those who are so employed are essential to company operations.
For example, insurance companies’ lawyers defend clients who are sued,
especially when large claims may be involved. These lawyers also review
regulations and policy contracts. Nurses and other medical professionals advise
clients on wellness issues and on medical procedures covered by the company’s
managed-care plan.

• Customers:
People mix not only includes employees but also customers. The customers are to
be treated with respect and courtesy. Customer is the king of the market.
Satisfaction of the customer is the primary motive of the insurance industry as
well as all the organisation

Process Mix


In case of insurance sector, the process mix includes the various

interactions that take place between the insurance agent and the customer in the
process of selling the policy to the customer till the settlement of claims.

The following process mix is followed by insurance companies in case of life


1. The insurance agent calls up the customer and informs him about the different
policies offered by the company and the price mix of all the policies. If, the
customer seems interested in taking the policy then, he fixes an appointment with
the customer.

2. The insurance agent meets the customer and gives him some information
about the insurance company and also about the benefits of the policy.

3. The customer is then asked to fill a financial review form (FRF) and the agent
is asked to find out the standard of living of the customer so that the insurance
company gets a clear picture about the financial condition of the customer and
what kind of policy he can afford.

4. The insurance company offers various policies but they might not be suitable
for the customer hence, on the basis of his requirements and financial status, the
insurance agent suggests two or three policies to the customer, which will be
suitable for him.

5. The insurance agent explains the different policy plans in detail to the
customer i.e. the amount of premium to be paid, the time interval at which the
premium is to be paid, the benefits of each of the policy etc. A brochure is also
provided to the customer wherein the entire description of all the policies is


6. Then, the insurance agent provides a feedback form to the customer and asks
him to give his feedback regarding the policies that he has been informed about.
This feedback is taken in order to find out whether the customer is satisfied with
the plans of the policy or whether the company needs to make the policy plans
more attractive so that it may appeal to its future customers.

7. Then, the next appointment is fixed by the insurance agent with the customer
and in this meeting; the customer selects the policy plan, which appeals to him.
The customer is then asked to fill up the proposal form which contains various
details of the payment and he is asked to make the first premium payment.

8. Then, the insurance agent submits the duly filled and signed form in the
insurance office along with the other necessary documents. E.g.: Medical Reports
in case of Life Insurance.
9. Then, a reconfirmation is taken by the agent from the customer that he agrees
with the terms and conditions of the policy.

10. The insurance agent then regularly collects the premium from the customer
whenever the premium becomes due.

Promotion Mix


‘Promotion’ is a descriptive term for the mix of communication activities,

which a service organization carries out in order to influence the target customers
on whom their sales depend. It is an element in an organization’s marketing mix
that serves to inform, persuade, or/ and remind people about an organization or
individual goods, service, image, ideas, community involvement or impact on the
society. It is used in hopes of influencing the recipients feeling, belief or
behaviour through any form of communication.
The types of promotional methods used in insurance sector are as follows:
 Advertising
 Public relations
 Sales Promotion
 Personal Selling
 Word of Mouth.

• Advertising:
It is a paid form of non-personal communication. It is used to create awareness
and transmit information in order to gain a response from the target market.
Forms of advertising are as follows:

1. News Papers and Magazines:

LIC give ads in the news papers and magazines round the year to continue
its brand image and also when new products are introduced. Normally its
ads are published in Times of India.

2. Electronic media:
Insurance companies also advertise its services in the Electronic media


3. Internet (Websites):
Companies like LIC (, ICICI
( all have websites from which people can get
the information about their products, prices, various schemes, and lots of
other information. People can also purchase the product through this

4. Television:
Companies like LIC, Met Life India, advertise on television to make
people aware of their products and services.

5. Radio:
ICICI Prudential advertises on 92.5 red Fm.

6. Hoardings:
LIC put its hoardings where there is a mass flow of people, especially
outside the railway station or at the backside of the bus. When Met Life
was introduced it has put his hoardings on the side of the train, to target
huge number of people.

7. Brochures:
Companies provide brochures to the customers so that they can have a
look on various schemes and their prices. Eg: LIC have brochures of
various schemes that are available different languages i.e. Hindi, Marathi,
English, and other regional languages. They provide the brochure of the
scheme the customer has chosen, in the language which they understand.
Brochure will provide the customer the information like features of the
scheme, amount of premium to be paid, rebates (if any), etc.


• Public relations:
Public relations are helpful for the companies to build their brand image, to
maintain good relationship with customers, to make the people aware of its recent
happenings, etc. Mediums of Public relations are:

1. Press releases:
This helps the company to convey its message to its customers and other

2. Seminars:
These are held to provide information about the new product launched,
position of the company in the market, etc.

• Sales Promotion:
1. Gifts:
LIC provides diaries, pens, booklets, etc to its customers.

2. Sponsoring Events:
Eg: Max New York Life Insurance Company has sponsored the recent
India-Zimbabwe-New Zealand tri series.

• Personal selling:

It is the most widely used method of promotion by all insurance companies.
They recruit, train and motivate the insurance agents to convince the
customers to buy insurance policies of that particular company. The agent
also collects the monthly premium and settles the claims of the customers.




It helps to create awareness about the brand among the target audience. It
also helps the company to convey its message to the customer.

Brand Positioning: Tag Line

LIC Zindagi ke saath bhi, zindagi ke baad bhi

Oriental Insurance Prithvi, Agni, Jal, Aakash, Sabki suraksha hamare paas

Max New York Your partner for life

ICICI Lombard Business Uninterrupted

Birla Sunlife Your dreams, our commitment

ING Vyasya Adding life to insurance

ICICI Prudential We cover you at every step in life.

Aviva Kal par control

Royal Sundaram Beyond Expectations

Bajaj Allianz Haske Jeeyo Yaar



Flower of services refer to a well-formed package of total services with all

the supplementary services being well formulated along with the core services.
The various petals of the flower are


• Information:
A marketer needs to provide adequate information to his employees and
his customers. This information is general information provided through various
communication channels. In the insurance industry information is provided to the
customers with the help of:

o Agents
o Seminars
o Web sites
o Print media
o Radio, Television, etc.

• Consultancy:
This is additional customized information provided to the potential
customers by the service provider. In the insurance industry it is provided by
company’s staff and agents.

Example: In LIC when a customer enters asking of information about the policy,
he is directed towards the assistant sales manager. Assistant sales manager will
listen to the customer’s requirement and as per his requirement list the number of
policies that are available. He will also ask the customer about the price and limit
the number of options for the customer, so that he can easily choose the policy
without confusion.

• Order taking:
Order taking should be done without mistakes. In LIC order taking is
generally done by:
o By Agents
o On Web site (


o By Assistant sales manager directly in the office.

• Hospitality:
Hospitality is a very pretty petal, reflecting pleasure at meeting new
customers and greeting old ones when they return. Hospitality finds its full
expression in face-to-face encounters.

In LIC customers directly come in contact with the sales manager. The
customers are treated as guests. The sales managers of LIC are given special
training of how to sell the policies to the clients. It is only in LIC that a customer
can meet the chairman directly without any appointment.

• Safe keeping:
It is in the process and procedures used by marketers to safe guard and to
maintain secrecy. In LIC the data of the customers is very important. They feed
the data of the customers in their Front and Application Program Software
which is connected with all the branches of LIC. The data is only available with
the sales people and not shown to any person.

• Exceptional:
Exceptional service means service over and above customer’s expectations.

LIC has the fastest claim settlement in the world thereby providing exceptional
service. LIC also solves complains of the customers within 7days.

• Payment:
The payment of premium is normally through cheques. Customer can make
payment in LIC through:
o Agents


o Loans
o Web sites
o Standing instruction to banks:
In this the account holder will give standing instruction to his bank to pay the
amount of premium every month without his consent on the given date
directly to LIC.

• Billing:
The billing should be done in such a way that there are no mistakes and if there
are any they must be immediately rectified. The billing should provide break-ups
of premium charged, service charges, etc.



Basically there are 4 steps to be followed before selecting a marketing strategy.

These steps are as follows:

1. Identification of Target Market:

The target market is the focus of deciding the promotion mix. The total number of
groups is analyzed and decision is taken regarding which segment is to be
Example: LIC (India) has introduced a new life insurance policy especially for
children’s (JEEVAN ANURAG).

2. Determination and Setting Objectives:

Service marketers employ a range of promotional methods, so it is essential to
‘What the promotion has to achieve’. It is necessary to define marketing
objectives clearly so that most effective type of promotion is designed and

In case of insurance sector, the main objectives of a promotion campaign will be:
• To make all or maximum population aware of the various insurance
policies of the company.
• To promote the advantages of all the insurance policies.
• To make the people aware of the risks involved and the importance of
taking insurance.
Example: LIC (India) conducts seminars and mass marketing campaigns in order
to make the customers aware of insurance and why it is needed.


3. Message development for right communication effect:

The message is an instrument for converting a suspect into a prospect. To obtain
an effective response from the target market, there is always need to plan an
effective message such that promotional efforts cause:
• Building of brand image
• Service awareness
• To provide knowledge for service
• To ensure that customer will have a positive perception for service
• To build up preference for service offered
In the insurance sector, LIC (India) and MetLife Insurance are examples of
companies who have used promotion mix to promote insurance.
Eg: LIC (India) promotes its life insurance policies using the slogan “Zindagi ke
saath bhi, zindagi ke baad bhi” This creates awareness of risk of death as well
as the importance of insurance. The slogan creates a positive perception about life
insurance in the minds of people.

4. Selection of promotion mix:

There should be a careful blend of promotion mix with the marketing strategy
of the firm and each situation should be examined for its merits and demerits.
The following criteria should be considered while devising different
promotional techniques:
 Overall marketing objectives
 Activities of the competitors
 Characteristic of target customer
 Cost effectiveness, etc.



• Company:
The company makes various promises to its customers through External Marketing.
The external marketing function relates to anything that is communicated to the customer
before the service is delivered. There are many factors beyond the traditional marketing
mix that communicate to the customers in case of LIC.


The Marketing Mix i.e. the product, price, place and promotion of LIC is been already
explained the 7 P’s. However, the important role of Agents in LIC cannot be neglected.
• Agents:
LIC is a kind of organization where Agents play one of the most prominent roles. No
customer could get an insurance policy without the help of an Agent. In fact, LIC has rule
of getting policies of the customer only through its Agents.
So in the above diagram the Agents are considered on the both the levels (Company &
Employee level) as per their role.

External Marketing is generally undertaken by the Company whereby the

Company makes certain promises to the Customer through Marketing Mix. But LIC is an
exception. Here even the Agents sometimes work as the Company itself i.e. they
themselves carry out External Marketing and commit certain promises to its potential
customers. No doubt, that the Agents do it on behalf of LIC, but there are many cases
whereby the Agents do major part of the External Marketing and it’s the Company and
the other Employees that help the Agents to keep their promises

In LIC, the customer may come to know about the different polices through the
External Marketing conducted by the Company as well as the agents, the customer has
major interactions only with the Agent rather than the company itself. The Agents
explain various types of policies available to the customer and convince them to purchase
that. Even an aspect of the Company is not covered through External Marketing; it’s
finally the Agents that convey different aspects through their own personal efforts and

It is very clear that LIC would be handicapped without the Agents and the Agents not
only work as the employees of the Company but also as the representatives of the
Company as well.


• Employees:
The agents and the development officers act as the front-line staff and they are in
direct contact with the potential or existing customers. They are the ones who keep or
satisfy the promises made by the company. The marketing of insurance basically comes
under concept selling. The agents are thus given various incentives, rewards,
commissions and all the necessary training required.

As regards incentive, they receive PLI (Productivity Linked Incentive), which is

based on the increase in premium amount and the sums assured by the agent. They are
also given extra commissions in case of policies, which are of high value. There are
normal promotions for any good work done on a regular basis. The agents generally work
under the training and guidance of their respective development officers.

These incentives provided to the Agents and other employees are a part of
Internal Marketing. Internal Marketing relates to meeting the needs of the employees so
they can meet the needs of their customer. As explained above, the company tries to meet
the needs of the employees or try to motivate them through their needs there by satisfying
customer needs.
Internal Marketing plays a very important role in LIC as the Agents are the heart of the
company without whom the Company can’t get a single policy.

• Consumers:
The consumers are the policyholders. Apart from the routine life insurance policies
other services like housing finance, mutual funds, pension and group insurance. Thus the
range of consumers is far and wide.

The employees of the Company need to convince the Customers through

Interactive Marketing. Interactive Marketing is nothing but implementation of a
marketing policy that is founded on direct interactive contact with the customer or the


desired customer. It is done through different types of Employee-Customer

communication, Customer Oriented Programmes, after sales services etc.

As explained earlier, the LIC Agents try to convince the customers to get the
appropriate policy provided by the Company. Word of mouth promotion and Personal
Approach is one of the major aspects of Interactive Marketing in any Insurance



According to Philip Kotler “Market segmentation is the sub-division of a

market into homogenous sub-sets of customer where any sub-set may
conceivably be selected on a market target to be reached with a distinct marketing

Thus market segmentation is the process that segments a market into smaller
sub-markets called segments. Segments are homogeneous within and desirably
heterogeneous in between. The rationale of intra-group homogeneity is that
people with similar attributes are likely to respond somewhat similarly to a given
marketing strategy. So that they can develop special marketing strategies for
particular segments. Segmentation is normally performed along with
demographic, geographic, psychographic, and behavioural variables;

• Demographic variables describe characteristics of populations and include

age, gender, race, education, occupation, income, religion, marital status, family
size, children, home ownership, socioeconomic status, and so on.

• Geographic variables include various classifications of geographic areas, for

example, zip code, state, country, region, climate, population, and other
geographical census data. Note that this information can come from national
census data.

• Psychographic variables describe life style, personality, values, attitudes, and so on.


• Behavioural variables include product usage rate and end, brand royalty; benefit
sought, decision making units, ready-to-buy stage, and so on. This information can be
extremely useful for marketing purposes.

Criteria of effective segmentation:

• Measurable- size, purchasing power characteristics of the segment must be
• Substantial - The segment must be substantial enough to earn profit
• Accessible- The segment must be accessible
• Differential- The segment must be conceptually distinguishable and respond
differently to different marketing mix
• Actionable- Effective programme must be formulated for serving the segment

Insurance Market Segmentation:

In insurance industry, profiling is very important in determining premium rates.
Typically, insurers collect every information available. However, analyzing thoroughly is
not feasible since the number of variables is normally large.
The starting point is thus mass marketing. In mass marketing, the seller engages
in the mass production, mass distribution and mass promotion of one product/ service for
all buyers. A niche on other hand is a more narrowly defined group seeking a distinctive
mix of benefits.
In terms of target customers, insurance products can be broadly classified into
products that can be used to indemnify perils that are faced by a few individuals or
industries. These can be termed as mass market and niche market products. Also, in terms
of product complexity, insurance products can be categorized into low complexity and
high complexity products.

Low complexity products: These are simple products with a standard set of covered
risks, perils and hazards.


High complexity products: They have a large number of riders and warranties
and do not indemnify certain causes of loss.


Niche Market 1. Fire Insurance 1. Weather
(different risk Insurance
profiles for 2. Product Liability

2. Marine
Mass Market 1. Householder’s 1. Personal
comprehensive Accident
Policy Insurance
2. Medical 2. Pension
Insurance Products
The distribution strategy should vary according to the type of policy.
Insurance products with low complexity can be sold through bank-assurance, but
products with high complexity should not be sold through the same channels, as it
would be very difficult (in terms of time, effort and cost) to train bank employees
in understanding the finer details of the complex policies.
In case of niche marketing, direct marketing can be used in the form of e-
mails and direct calls through agents to specific customers belonging to the target
segment. For high complexity niche products, spreading awareness and selling
through financial advisors, consultants and brokers would also be a good strategy.



Niche Market 1. Direct marketing 1. Well trained
through agents
personalized e- 2. Financial
mails advisors/consulta
2. Advertise in area nts
specific journal 3. Brokers
with toll free
numbers to set
up appointments
3. Agents
Mass Market 1. Bancassurance 1. Well trained
2. Postal agents
department 2. Advertise in
3. Agents newspapers with
toll free numbers
to set up



• Helps to understand the need and the requirement of the policyholder and
accordingly helps to cater i.e. the needs and the requirement rural sector is
different from the urban sector

• Segmentation helps in having a microscopic study of culture language, likes

and dislikes. This helps in marketing decision which indirectly helps to cater all
segments like rural & urban, men & women, agriculture and industrial.

• Segmentation helps to make promotional measures more creative like

advertisements, personal selling, pricing/fee decision. Segmentation helps to
cover maximum policy holder. It helps to identify profitable segment and helps in
formulating attractive packages.

• Many successful insurance companies will recognize the Internet‘s potential

as a powerful marketing tool. Not only might this reduce costs for insurance
companies, but it also could enable many clients to turn to the Internet first to get
information on their policies, obtain quotes, or submit claims.

• Insurance companies will continue to face increased competition from banks

and securities firms entering the insurance markets. As more of these firms begin
to sell insurance policies, increasing numbers of insurance sales agents will be
employed in them, rather than in insurance companies.

• Insurers in India should also explore distribution through non-financial

organizations. For example, insurance for consumer items such as refrigerators
can be offered at the point of sale. This piggybacks on an existing distribution
channel and increases the likelihood of insurance sales.



A disappointed customer does not just go away, but he/she goes away and
might not come back at all. And there are great chances that he might take away
some other existing customers or he may restrict the potential customer to be the
Loyal Customer of the Company. Here lies the need for Service Recovery. It is
quiet possible that at every given opportunity, he might speak about the negative
experience that he had with the Company which finally affects the decision of the
other customers too.

In case of Insurance, it might the customer may be disappointed due various

reasons like:
• Faulty claim settlement
• Lack of concern on part of the Agents/Company
• Lengthy and exhausting procedures
• Excessive number of documents for getting a policy as well as for claim
• Inflexibility in terms of premiums.
• Unavailability of required Infrastructure/ Technical Support System.
(computers, printers etc)
• Better service quality from the competitors.
• And many personal reasons.

• Impact of word of mouth on customer’s repurchase decision is twice as

important as corporate advertising. So the Company needs to recover before
things start to get worse.
• Insurance Companies should make sure that their customers are not
dissatisfied due to service failure. And if at all they are disappointed, they follow


some basic steps to recover from the loss of Customer Dissatisfaction. Some of
the steps are:

Apologise or Acknowledge:
Apology rendered in first person is the most powerful tool. The magic
word “I am Sorry” provides authenticity of personal involvement. LIC has
realised the importance of personal involvement and has included it in the
training program itself. Once the Agent is recruited he needs to undergo a
compulsory training program designed by LIC. The Training Program also
explains them the importance of the smallest of the customer .i.e. customer who is
just seeking general information. The Agents and Employees are trained to
Apologise to its customers even if they are not at fault.


• Listen, Empathise and Asks Question:

Customers are looking for a good listener who allows them to vent their
frustrations, shows understanding of their upset and by listening offers tactic
evidence of believing the customer’s report of the error on part of the company.

As mentioned earlier, LIC has established elaborate Grievance Redressal

Machinery at different level as per the customer requirement. There are
Complaint cells which are specially set up to listen up to each and every
customer’s problems. LIC gas also set up Policyholder Councils and Zonal


Advisory Boards to understand the problems of their customer situated in any

part of the city.

• Offers a Fair Fix to Problem:

Customers want wrong to be set right and expects service contact
employee to be skilled, empowered and interested in setting things right. This is
the main reason why LIC conducts training programs for the newly recruited
Agents as well as the other Employees. In any kind of breakdown situations LIC
try to offer a rational explanation and demonstrate sensitivity and concern to the
customer rather than defending themselves.

For e.g. there is a breakdown in a computer at the payment counter. Now,

this Payment Counter might be open only at a particular time of the day. So if the
problem is repairable within a short period of time, than the Branch Manager
would extend the timings for Payment (only for that day) so that the customer
don’t have waste another day for the same purpose.

• Offers Some Compensation for the Inconvenience:

Compensation here wouldn’t mean of just monetary compensation or
some extreme measures like firing the Branch Manager Etc; but it is just to make-
up for the loss of customer satisfaction. It could be like “it’s on us”; “free service”
etc. The service provider should plan certain compensation policies in advance
for various types of situations and deliver it as and when the situation is faced.
For e.g.: Suppose there is a customer who is standing in a long queue for
payment of his premium on the very last date of the permissible period. And all
the payments were not accepted on the same day within office timings and hence
the payment was finally delayed. There are chances that the customer may blame
the employees of the Company for slow clearance of the premium. The Company


could however compensate to the customer by waiving the penalty payable due to
delay in payment of premium.

• Keep the Promises:

It basically means that the Company should keep the promises made to the
Customer before or at the time of service provision i.e. the Company should fulfil
its commitments.
LIC makes sure that none of the Agents provide any kind of wrong information
or false promises to its customers which mislead them. LIC ask their Agents to
give reasonable commitments so that they could be fulfilled by the Company or
the Agent on behalf of the Company.

• Follow Up:
This is the most important step in Service Recovery as it ensures that
whether the implemented Service Recovery was Satisfactory or not. It would
include Internal and External Follow-up. Internal Follow-up would be to ensure
that the solutions they put in motion are actually executed and the External part
would be to get feedback from the customer whether he is satisfied or not.


In a vast Organization like LIC, catering to the various needs and
aspirations of millions of policyholders, grievances of customers do arise
occasionally. In order to redress these grievances LIC has established elaborate
Grievance Redressal Machinery and the details are as under.

• Grievance Redressal Officers:

Grievance Redressal Officers have been designated at all levels of the
 At the Branch level: The Sr. Branch Manager
 At the Divisional level: The Marketing Manager
 At the Zonal level: The Regional Manager (Marketing) in case of
Ordinary policies
 The Regional Manager (Pension and Group Schemes) in case of
 At the Central level: The Addl. Executive Director/Chief
(Marketing/Customer Services) in case of Ordinary policies
 Chief (Pension and Group Schemes) in case of P & GS policies.
• Complaint Cells:
For those customers who are not in a position to meet the Grievance
Redressal Officers in person, a Complaint Cell is functioning at the Central,
Zonal and Divisional Offices. They can send their written complaints to these
Offices. Such complaints are registered and monitored with the respective
servicing units for proper Redressal.

• Claims Review Committee:


In a few cases of death claims, LIC is put to the necessity of repudiating

them to safeguard the interest of the genuine policyholders. Claimants who are
dissatisfied with the decision of repudiation of claim can approach the Claims
Review Committees set up at all the seven Zonal Offices and at the Central
Office. These Committees comprise of senior Officials of the Corporation and
also retired High Court/District Judges and they review the claims objectively and
dispassionately to rule out any miscarriage of justice to the claimant.

• Complaints received through the Government:

Some of the aggrieved policyholders write directly to the Government of
India seeking Redressal of their grievances. Such grievances are attended to on a
top priority basis. For this purpose, a special cell has been set up at the Central
Office level for monitoring and for satisfactory redressal.

• Policyholder Councils and Zonal Advisory Boards:

In all the 100 Divisional Centers, Policyholders' Councils have been
established. Three policyholders of the area represent the interest of the
policyholders and interact with the Divisional Management on consumer
concerns. Similarly, at all the seven Zonal Centers, Zonal Advisory Boards are
functioning. Many consumer-activists are inducted as Members to these Forums
to protect the rights of the consumers.

• Consumer Affairs Committee:

A Consumer Affairs Committee has been constituted at the Board level
with many eminent consumer activists and members of public joining as
members along with the Chairman and the Managing Directors of the


Corporation. This Committee looks into various areas of consumer interests and
advises the Corporation.

• Citizens' Charter:
LIC has adopted a Citizens Charter through which it reiterates its
commitments to the customers and the standards for general procedures, the
standards for policy servicing, the standards for easy access to information for
customers and the standards for fairness in dealing with the customers have been
laid down.


ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of
India's foremost financial services companies-and Prudential plc - a leading international
financial services group headquartered in the United Kingdom. Total capital infusion
stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc
holding 26%.

ICICI Prudential is the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI
Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic
Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our
distribution, product range and customer base, we continue to tirelessly uphold our
commitment to deliver world-class financial solutions to customers all over India.
ICICI Prudential is a case study in the role of marketing in reshaping an industry. It
highlights how an industry where “sell” and “push” were often used words and consumer
was nothing more than a file no., has changed to one where “consumer preference” and
“consumer pull” rules the roost. Here’s a look at how ICICI Pru changed the rules of the
game and emerged a leader in the process.



When the insurance sector was liberalized in 2000, the private players had to contend
with a few issues. Ratio of premium to GDP was low: 1.3% of GDP was invested in
insurance. Insurance penetration was at an abysmal 22% of the insurable population.
Besides the above the private players were faced with: Attitudinal Barriers, Perception of
insurance as a tax saving tool and lack of a consumer centric approach in service and
product offerings.

The Marketing Challenge facing ICICI Pru:

The challenge therefore was to change established category drivers (death payment & tax
saving) and to get the consumer to evaluate insurance on a more emotional platform
(protection) rather than a mere rational decision (tax savings).

The Campaign Objectives:

A) Reposition the category in the consumer's mind. Influence the consumer to view it as
a protection instrument and not a tax saving product alone.
B) In the process, create differentiation for the ICICI Pru brand as a provider of social
security and family protection.
C) Achieve leadership status in saliency, image & product parameters.
D) Build credibility and trust.


The Target Audience:

Representing an ideal mix of medium to high net worth individuals: The consumers most
disposed towards buying life insurance. Middle-aged professionals, primarily male,
salaried and self employed, age group: 28 - 45 years, household income: Rs.20, 000 and

Creative Strategy:

The essence of the creative strategy: To get the consumer to look at Insurance as a means
to lead a worry free life and not as a necessary evil. To this effect the core brand insight
highlighted was "As head of the family it's my responsibility to take care of my loved
ones and protect them from the uncertainties of life", summed up in the advertising idea:
‘We cover you at every step in life (Suraksha… Zindagi ke har kadam par, as
interpreted in Hindi ). ICICI Pru was positioned as an enabler of protection relevant to
the needs of the life stage that you are in. At the core of the communications strategy was
appropriating the generic category benefit (protection) through its greatest metaphor –


The Creative execution:

TVC: Building image and creating a differential in the most creative and compelling
manner. The creative execution heightened the emotional connect with the ICICI Pru
brand - Indian; satisfaction of knowing that one’s loved ones are protected. Symbolic
representation of the protector of the family through situations showcasing various life
stages and creating endearing imagery of protection and familial bonding.

Press: Gave the consumer a rational and tangible reason to buy insurance first and
secondly from ICICI Prudential. The product specific advertising focussed on changing
the prevalent perception about insurance and breaking a few myths: non- affordability,
insurance not being good investment option and the myth that insurance was good only
for tax saving.


Other Communications:

Other programs included direct mail, PR of communications campaign in press & TV,
website marketing; and database generation through Banc assurance channels.

Media Strategy:

In a market likely to be cluttered, we used multiple touch points to reach the consumer.
The role for each medium was envisaged. The TV medium was used to enhance the
emotional link with the brand. Strategic use of 15 sec. edits facilitated high frequency
levels. In print, cost per response rather than cost per thousand as responses were
measured in form of call-ins. Radio FM, Cinema, Internet were used to create a media
multiplier effect.

The results of communication efforts:

Being no: 1 in awareness and saliency. Awareness: ICICI Pru showed a significant
jump in awareness between Feb and Sept 2001. Image: Highest score among all
Insurance players including LIC, on image parameters like safety, modernity, service,
good returns etc. Intention to invest: Next only to LIC as per research (All Source:
Research by ORG Marg). No. of calls and emails: There were 70,000 calls at the call
center and 6582 emails in the year 2001.

Sum up:

In just over a year ICICI Pru has emerged as India’s no.: 1 Private Life Insurance
Company with almost 50% market share of the private players. Has sold highest


no. of policies both in volume and value. Major Milestone - Over 100000 policies
on Mar 31, 2002.


Silver Effie for Effectiveness of the ‘Retire from Work not life’ advertising
campaign Effies 2003

Best Life Insurer 2003. Outlook Money Awards 2003 & 2004


ICICI Prudential Life won the ICICI Group Marketing Excellence Award 2008 in
three key categories for its marketing initiatives

ICICI Prudential Life was awarded the Life Insurance Company of the Year at
the12th Asia Insurance Industry Awards 2008.


Interview of Saugata Gupta, Chief-Marketing, ICICI Prudential

Life Insurance Company

Which banks have you tied up with for bancassurance?

ICICI Prudential currently has the largest number of bancassurance tie-ups, which
include ICICI Bank, Bank of India, Federal Bank, South Indian Bank and Punjab and
Maharashtra Co-operative Bank.

Does an individual receive any additional benefit, if he buys the risk cover through
his bank rather than from the insurance advisor?

We believe that customers should have the option to approach life insurance companies
from any channel that they want - be it through advisors, banks, direct mailer, etc. Since
customers transact frequently with their bank, purchasing life insurance through the bank
is yet another value-added service they can avail of through a channel with which they
are already familiar and comfortable with

What is your customer base?

As on March 31, 2002, ICICI PruLife issued 100,000 policies.


How does ICICI Prudential differentiate itself from other insurance companies?

The ICICI Prudential edge comes from our commitment to our customers, in all that we
do - be it product development, distribution, the sales process or servicing. Our key
differentiators can be summarised as under:

• Our products have been developed after a clear and thorough understanding of
customers' needs. It is this research that helps us develop unique products to cover
our customers in every step of their life.
• Having the right products is the first step, but it's equally important to ensure that
our customers can access them easily and quickly. To this end, ICICI Prudential
has an advisor base across the length and breadth of the country, and also partners
with leading banks, corporate agents and brokers to distribute our products.
• Robust risk management and underwriting practices form the core of our
business. With clear guidelines in place, we ensure equitable costing of risks, and
thereby ensure a smooth and hassle-free claims process.
• Entrusted with helping our customers meet their long-term goals, we adopt an
investment philosophy that aims to achieve risk adjusted returns over the long-

What is your advertising budget and how do you plan to take on competition?

Our advertising spends last year were Rs 14.8 crore. This year we are looking at
maintaining our share of voice and spending accordingly. While we were not the largest
spender last year, we were the most efficient. Cost per saliency point (i.e money spent per
awareness unit) as per the ORG Marg survey, is the least for ICICI Prudential. Our media
planning and buying has been smarter than that of our competition. Our brand is already
one that is well recognized, so we already have a lead over the competition.


How do you plan to go about improving brand awareness of your product?

We will continue to build our brand and drive consumer awareness through advertising,
seminars, direct marketing, etc.

While awareness has been increasing it is still observed that the slant is towards LIC
products. When do you think a situation will come when customers will ask for
private insurers' products by name?

Customers today are becoming more discerning and evaluate life insurance policies based
on their specific benefits. We frequently launch new, innovative policies with wide
customer appeal. Such efforts not only build the brand, but also drive customers to
purchase life insurance from us. So customers are already beginning to seek alternatives
to LIC and are asking for policies from specific life insurers, based on the brand,
customer service and value proposition.

Insurance polices? How will it affect policy sales?

Life insurance is the most ‘mass market’ of all savings instruments available in the
country (Average Sum Assured Rs 75000). In addition it also provides a security in
country where there is complete absence of any state funded social security system and is
an ideal long term investment. Despite its versatility, it constitutes only 7 percent of the
Gross Domestic Savings (GDS) of the country. Given the current socio-economic
situation there is a strong case to encourage long term savings coupled with protection
through Life insurance.

The premium collected by a life insurer consists of 2 elements i.e.

(i) mortality/morbidity charges and
(ii) savings on which the life assured gets a return. The savings element in the Premium
cannot be construed as “Services” for the purpose of levy of Service tax as this would be
akin to taxing Banks or a Mutual fund on Deposit/Investment received by them. For


instance, the service tax on Banks is confined to services like credit card services,
merchant banking, securities and foreign exchange broking and not on the deposits
collected by them. Further the service tax on credit card services is levied on the fee and
not on the actual spends on the card.

Post budget, what changes in strategy do you plan to adopt in marketing risk covers
considering the reduced benefits for policyholders?

Our strategy has always been to help the customer assess his/her need for a policy and to
subsequently sell him a policy based on that need, through our team of trained advisors.
ICICI Pru Life offers a range of policies to meet needs at every step in life and our
communications strategy complements this by reinforcing that life insurance is not
merely a tax saving tool, but a means of protecting life. This strategy helps consumer to
recognize the true value of their policy. We will continue with this strategy, despite the
changes that the budget has imposed.

LIC plans to change tack and sell insurance harping on the 'pure risk' element. But
considering that most individuals purchase policies for tax benefits, post budget how
far will it be easy to sell insurance.

ICICI Pru Life has observed that consumers are now realizing the holistic benefits of life
insurance - that it is not merely a tax saving tool, but an important financial instrument
that serves as a stable investment vehicle offering consistent returns, and above all
protects life against uncertainties that face us all.

How many policies have you sold so far?

ICICI Prudential Life Insurance will reach the 100,000 policy mark in a few weeks,
making it the No. 1 private life insurer in the country.


What is your present market share?

While official figures are not yet out, it is estimated that private players have captured 3-
4% of the market (in value terms) in the top 5-6 cities.

What percent of your policyholders buy policies strictly for tax benefits?

As mentioned earlier, customers are increasingly recognizing life insurance for the
multidimensional financial product that it is, and more and more customers are
purchasing life insurance for reasons beyond section 88 namely the protection benefit.

It has been over a year and private insurers have only been able to make a dent in
the market. What are the roadblocks you face in marketing?

In the one year that ICICI Pru Life has been operating in the Indian market, it has made a
considerable impact by introducing innovative life insurance policies that meet customer
needs as well as setting new levels in customer service. The key task is to grow the
distribution network and tap the huge potential in an underinsured, underserviced market.

How many claims have you received so far?

We have received a few claims, which have been satisfactorily settled.

What is the recently introduced 'Code of Conduct all about? Has your company
already enforced it? If not, when do you plan to enforce it?

The ‘Life Insurance Self Regulation Standards of Conduct and Sound Practice’ aims to
protect consumers’ interests by giving them the necessary information pertaining to their
policy in an accurate and understandable manner.


This includes giving out benefit illustrations that meet specific guidelines such as
projected rates of return, keeping them updated about the status of their policy, etc. The
code comes into force for all life insurance companies from January 1, 2004.

What kind of changes will it bring about in selling of insurance products?

The code of conduct sets out two rates of return – 6% and 10% - both of which all
companies must use for their benefit illustrations. This standardization across companies
will enable customers to make a better comparison of products of different companies
and select one that suits them best.

In what ways will the Code of Conduct benefit the customer?

The greater amount of information given to a customer will give him/her a clearer idea of
the features and conditions of the policy, what he will put into the policy, the benefits that
accrue to him. Standardization of the rates of return in the benefit illustrations will
facilitate easier comparisons of different products. Other aspects, like informing a
customer when the policy proposal has been accepted, depending on the medical tests,
will ensure that customers are more aware of their rights and responsibilities.

How difficult will it be to market risk products now with the code of conduct
making it mandatory to project earnings that will have to be based on standardized
rates of return laid down by the Life Insurance Council?

We firmly believe that the customer must have choice and transparency when it comes to
selecting his/her life insurance products, and this code is a step in that direction. Our
benefit illustrations have long since featured two different rates of return to give the
customer a better idea of the possible earnings on his policy, and we will soon be
bringing these rates in line with those that are being prescribed by the Life Insurance
Council. In fact, our benefit illustrations have so far proven to be an effective sales tool.


Also illustrations projected by insurers will now have to project two scenarios. How
far will this step benefit/affect insurance sales?

Because life insurance products are long-term in nature, it is difficult to predict the rates
of return over the period of the policy. Hence life insurance companies will project two
scenarios of investment returns to for the customer, so that they have a clearer idea of
what the likely returns for their policy are, depending on how the markets and economy
performs. This increased disclosure gives greater confidence and information to the

Which advertising media are you planning to take to?

Over the next six to twelve months we plan to be on mass media, including press,
outdoor and TV. Alternative channels such as the Internet, direct marketing, events
and exhibitions are also being looked at.

What steps have you taken to educate the rural folk about the importance of
We have set up a dedicated team to target the rural business in a focused way. We are
developing products specifically designed for the rural segment; establishing channels
to reach out them; and setting up customer service processes to service their needs in
a cost effective manner. Only once these are set up, will we start active awareness
building programs.

Awareness about the importance of health insurance is low. What steps have to
taken to improve the awareness in the urban as also rural areas?
We have begun by introducing group health products. At present we are in the
process of finalising our plans for the retail health segment.

Your company had plans to capitalise on the internet distribution channel to sell
insurance products over the web. How far has it materialized?
We are in the process of building this functionality. There are regulatory issues that


need to be ironed out especially for issuing policies over the web and for accepting
online credit card payments.

How many agents do you have at present?

About 1000 retail agents.


 Marketing of Insurance is essential ingredient for selling insurance

product. Insurance product is intangible.
 Insurance company uses different marketing measures to convince the
customers and increase market shares.


 Private company are using various 7p’s to sell product. Private players are
successfully market their products.
 After privatisation marketing is essential for all private companies.
 Life Insurance Companies as well as 16 private players they advertise
their products through Agents, Television etc.
 Marketing of Insurance can be useful for companies who want sell the
policies, increase profit share, market share.
 Thus it is clear, that insurance sector is booming and is one of the most
dynamically growing sectors of the Indian chapter. Growth potentials are
tremendous, and in era of cutthroat competition, the best marketer can reach to
dizzying heights.


 Books

 Service Marketing by Ravi Shankar

 Insurance by M. J. Mathew
 Insurance Plus by LIC


 Marketing in Services by Philip Kotler

 Journ
 Insurance Chronicles
 Money Outlook

 News
 Insurance Boom – Supplement from Economics Times
 Insurance Gazette – Supplement from Financial Times

 Websi