This whitepaper explores the need to develop an effective multi-channel distribution strategy that meets customer demands and delivers differentiating customer experience. Apart from the conventional ways of marketing an insurance policy, which include brokers, agents, kiosks, work site marketing and direct marketing, insurance companies now explore new avenues of innovative and attractive range of distribution techniques that can be exploited to their advantage.

1. www.niit-tech.com
Multi-Channel Distribution in Insurance
Challenges and scope
Anuja Verma
NIIT Technologies White Paper

2. CONTENTS
Introduction
3
Emerging Trends
3
• Customer Segmentation
4
• Social Media
4
The Right Technologies
4
Challenges Faced in Multi-channel Distribution System
5
IT to Improve Multichannel Distribution
5
Multichannel Distribution – Delivering on the opportunity
6
• How does Technology ease the work of insurance companies?
6
- Customers
6
- Channel Partners
6
- Business
6
Conclusion
6
About Niit Technologies
7

3. Introduction
The Indian life insurance sector is evolving and growing substantially
and is one of the key drivers of India’s economy. The Indian insurance
sector is moving rapidly towards international standards with new and
innovative product offerings. With rising income levels, customers are
demanding more sophisticated risk solutions.
Life insurance was once purchased primarily as a tax-saving tool.
A paradigm shift in regulation led to more customized solutions.
The number of insurance holders has more than doubled to 5.32
crore policy holders in five years to 2010, with the total life insurance
premium tripling to Rs 2.65 trillion during the same period.
have a deep, actionable and detailed analysis of the end users or
target segments, so the distribution channel can be set up to reach
the segment effectively. Inefficient customer segmentatio n and
targeting actually ends up delivering less value to the customer and
hence to the insurance company also.
This whitepape r explores the need to develop an effective
multi-channel distribution strategy that meets customer demands
and delivers differentiating customer experience.
Emerging Trends
In the last few years we have seen unprecedented growth in the
choice of channels that customers can use to interact with the
business. Insurers are now adopting a multi-channel distribution
The Indian customer is offered innovative solutions that combine
strateg y
protection and long-ter m wealth creation. Improved services ,
demographics of insurance buyers, Insurance companies are also
sound advice and innovative products are provided through a
using multiple types of distribution systems. Based on the needs
range of distribution channels such as banks, agents, direct offices
and status of target customer segment distribution systems are
and online platforms. The emergence of a more diversified and
chosen. A combination of all or most of the following distribution
multichannel distribution network has revolutionized the insurance
channels make it a multi-channel strategy:
sector, with increased access and better service to customers.
• Broker
to
drive
operationa l
efficienc y.
With
changin g
• Individual Agents
Apart from the conventional ways of marketing an insurance policy,
which include brokers, agents, kiosks, worksite marketing and
direct marketing, insurance companies now explore new avenues
• Corporate Agents
• Micro-Insurance
• Bancassurance
• Cell Phone/PDA
of innovative and attractive range of distribution techniques that
• Kiosks
can be exploited to their advantage. Today, an insurance company
• Internet
leverages multiple channels for distributing its services to target
• E-commerce
customer segments.
• Work Site Marketing
• Direct Marketing – Internet
Distribution channels not only affect the top line and bottom line of
a company but also raise concerns on the cost management of
the firm. In this fluid environment, an insurance company needs to
• Digital TV/Satellite Selling
• Supermarkets and other retail outlets
• Affinity Channels and Groups
• Insurance specific debit/credit cards
• Call Centers
3

4. Customer Segmentation
If any agent has a concern about a new product or program, the
Segmentation in marketing is important because it matches a
underwriter can proactively reach out to the agent with a relevant
customer’s requirement to the offerings. This helps in creating brand
communication as well.
loyalty as the customer will be happier to purchase a product that is
specifically targeted to his or her needs better than competition. This
The recent and prolific rise in social media has created an irreversible
spells more gains for the business as people are willing to pay more
shift in the way the distribution world is changing. Figure 1 lists all the
for a product which are tailored to their needs. Segmentation, thus,
multichannel choices that are available
leads to customer retention as well.
TV
Here is an example of how different sets of customers can be
Radio
Facebook
Twitter
approached using different channels:
Newspaper
MySpace
Market
Segment
Direct Mail
Company Website
YouTube
Multichannel Choices
RSS
Wealth
• Full Service Brokers
Affluent
• Brokers
• Vendors
• Agents
Email
Friends/Family
Blogs
Mass
Marginal
• Insurance Agents
• Bundled Vendors
• Banks
Distribution
Online Forums
• Banks
• Credit Unions
Retails Location
Customer Service
Mobile
Figure 1: Multi-channel options
The Right Technologies
The five key and current technologies that support multi-channel
distribution:
Social Media
• Mobile: Insurance companies will adopt mobile
Today, social media platforms have started playing a significant role
technologies, particularly tools such as iPad for brokers
in the distribution strategy of insurance companies. A Twitter
and underwriters. Adoption of this technology is
account or company/brand pages on Facebook are various ways to
expected to rise in the commercial lines space.
reach out to prospective and current policy holders.
• Analytics: Leveraging analytics for micro segmentation
of customers will help insurers target the most
The important element for such platforms is the status update which
profitable customers and brokers. This will in turn
enables a company to be aware of the activities and intent of a large
increase their return on investment and help retain
group of people without having to ask them.
customers and aid in cross sell and up sell initiatives.
• Social Media: These platforms will play an
For example, for an underwriter working with 100 agents, it can get
increasingly important role in influencing purchase
difficult to know about their achievements or updates. Here, tweets
decisions. Customers, particularly the youth,
or updated status messages on social media platforms can be
constantly communicate about their life status
captured and used for monitoring performance in almost real time.
through social media. Insurance companies need to
4

5. • Cannibalization : This occurs when one service of a brand is
create the technology and service infrastructure to
marketed more than the others. As a result, the market share of the
listen to relevant 'narrative bits' by establishing
other service is affected.
effective 'listening posts'. Social media and gaming
present a great opportunity to bring a 'fun' element
to the sales process. Also gaming can help insurers
improve their brand image. For example, Farmers
Insurance in the US has partnered with the popular
IT to Improve Multichannel
Distribution
Facebook game called Farmville and lets players buy
Technology is a transformation agent and its processes and systems
'protection insurance' for their online 'crops'!
have ensured efficiency in customer service and operations .
• Collaboration: Increased collaboration between
Technology can be deployed to make multichannel distribution more
underwriters, customers and brokers is possible
effective. The various tasks that technology can simplify include:
through the effective use of collaboration technology.
• Data warehousing
These technologies also help to personalize the
• Providing access to accounts, services and assistance online:
conversation between the underwriter and broker
Customers can view the premium, tenure and other terms related
and cement long term relationships. These help in
to their insurance policies.
reducing the sales cycle.
• Product Configurators: These help insurers create
• Analytics: Insurance companies can analyze behavior patterns,
needs and desires of the customers.
the building blocks for effective multi-channel
infrastructure. Product configurators also help insurers
launch products quickly into the market, bundle
product offerings and customize quickly based on
changing market demand or competitive pressures.
The figure below depicts the channel integration using information
technolog y, which allows smooth flow of informatio n across the
different elements.
Role of IT in
multichannel distribution
Challenges Faced in Multichannel Distribution System
customers via the right channels at the right time are facing challenges
on two main fronts.
Independent
agents/broker
Customer
Organizations striving to deliver the right products and services to
Third
Party
Network
Web based
channels
Insurance
Providers
Internet
IT Systems
Tele Sales
Direct Sales
Product Policy/
Customer/Agent
Internet
• Brand dilution : Brand dilution can happen when insuranc e
companies choose inappropriate channels for different customers.
Product Infromation
New offers & promotion
Customer enquiry
Underwritting
App Processing
Cust. Servicing
Policy issurance
5

6. The product information, new offers and promotions, and
online. Customers can calculate premiums, bonus amounts, tax
customers’ enquiry on new offers flow from the insurance
and communicate with an insurance advisor. They can also check
company to the customer. The third party channels such as
the status of their policies and calculate the amount of loan they
insurance agents/brokers, web based channels, tele-sale
can avail on their insurance policy. They can also download forms
executives etc. coordinate with the customer as well as the
for purchasing other policies and pay their premiums online.
company to get new business.
Customers can also give details such as change of address right at
the website.
Once a case has been logged in, the entire process of
underwriting, customer servicing and policy issuance and
Channel Partners
application processing is done through complex systems which
Online portals can be developed for channel partners such as
are developed as per the requirements of the insurance
brokers and agents. These portals will allow them to check their
company. After a policy is issued, technology is used to regularly
commissions and payment status. It will also give them the
interact with customers and provide efficient service.
advantage to check claims position and track the status of the
case deposited.
Business
Multichannel Distribution –
Delivering on the opportunity
as well. Some of them are:
NIIT Technologies has evolved multi-channel distribution strategy to
• Gain economies of scale from a common set of data and
optimize the opportunities that social media revolution and multiple
• Lower costs: Insurance companies have moved from
distribution
business rules.
• Reduce agent-based administrative tasks to maximize sales
channel choice present and offer:
single-channel
The insurance company can see benefits in various other spheres
strategies
to
multi-channel
distribution as the market evolved and competition intensifies.
These changes have shown a significant decrease in the average
cost of distribution services. Sophisticated well trained wealth
activity
• Provide analytical support to manage the producer and customer
life cycle
• Track distribution partner activity and establish key performance
metrics
management consultants target high value customers. Insurance
is treated as just another financial product for others at the lower
end of the customer spectrum.
• Personalization: Insurance companies can work on more
Conclusion
customized selling by adding a technical sales force for selling
The growing insurance market offers scope for better penetration
complex products or providing personal assistance to high
and accessibility through diversified channels. Insurers have an
net-worth individuals. The various factors here are trust,
opportunity to differentiate themselves through their distribution
customer servicing, multiple and accessible service points, good
channels. There is substantial value to be gained in each channel.
IT support and the comfort factor.
Innovative and customized products can be offered to customers
through multi channels. Incremental investments over a sustained
How does Technology ease the work of
insurance companies?
period of time across multiple channels provide the best solution. A
company’s ability to offer an integrated multi-channel experience
will be the key to customer satisfaction and profitable growth.
Customers
The portal of an insurance company can offer a plethora of services
to customers that can be save their time and also purchase policies
6

7. About NIIT Technologies
NIIT Technologies is a leading IT solutions organization, servicing customers in North America,
Europe, Asia and Australia. It offers services in Application Development and Maintenance,
Enterpris e Solution s includin g Managed Service s and Busines s Process Outsourcing to
organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and
Government sectors. With employees over 7,000 professionals, NIIT Technologies follows global
standards of software development processes.
Over the years the Company has forged extremely rewarding relationships with global majors, a
testimony to mutual commitment and its ability to retain marquee clients, drawing repeat
business from them. NIIT Technologies has been able to scale its interactions with marquee
clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into
extremely meaningful, multi-year "collaborations.
NIIT Technologies follows global standards of development, which include ISO 9001:2000
Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information
security management certification. Its data center operations are assessed at the international
ISO 20000 IT management standards.
NIIT Technologies Ltd.
Corporate Heights (Tapasya)
Plot No. 5, EFGH, Sector 126
Noida-Greater Noida Expressway
Noida – 201301, U.P., India
Ph: + 91 120 7119100
Fax: + 91 120 7119150
Americas
NIIT Technologies Inc.,
1050 Crown Pointe Parkway
5th Floor, Atlanta, GA 30338, USA
Ph: +1 770 551 9494
Toll Free: +1 888 454 NIIT
Fax: +1 770 551 9229
Europe
NIIT Technologies Limited
2nd Floor, 47 Mark Lane
London - EC3R 7QQ, U.K.
Ph: +44 20 70020700
Fax: +44 20 70020701
Singapore
NIIT Technologies Pte. Limited
31 Kaki Bukit Road 3
#05-13 Techlink
Singapore 417818
Ph: +65 68488300
Fax: +65 68488322
Write to us at marketing@niit-tech.com
www.niit-tech.com
D_17_120413
A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2
ISO 27001 certified | Level 5 of People CMM Framework