INSURANCE MANAGER

Syllabus: Role of insurance manager, Product Knowledge, Customer orientation,

Business target, Records and Review, Trustworthiness, Target market, Long term
relationship; Behavioral aspects of insurance manager Motivation, Morale,
Communication skills, Persuasive skills and Analytical ability
1. Who is an insurance manager?
Insurance manager is a person or an entity that exercises managerial functions
and/or gives, or offers or agrees to give advice in relation to the business of one or
more insurer or reinsurer.
2. Distribution channels of Insurance in India
Both Life insurance and Non-life insurance have got the following distribution
channels in marketing their products.

3.

Direct sales Online

Direct Sales other than online
Individual agents
Corporate Agents- Banks
Corporate Agents Other than banks
Web aggregators
Brokers
Insurance Marketing firm
Why insurance industry needs such diversified distribution channel
unlike other financial services?

Before debating about the distribution channels of the insurance industry, it is worth
studying about the reach of Insurance in India. According to Swiss Re Sigma study
World Insurance 2014 report, India ranked 11 th among 88 countries with respect to
total Life insurance premium and ranked 20 th with respect to total non-life insurance
premium.1
The reach of insurance is measured by its density and penetration. The measure of
insurance penetration and density reflects the level of development of insurance
sector in a country. While insurance penetration is measured as the percentage of
insurance premium to GDP, insurance density is calculated as the ratio of premium
to population (per capita premium).

1 IRDA Annual Report 2014-15, Pg 6

Source: IRDA Annual report 2014-15, Pg7

It is evident from the above table that India has got very poor penetration and
density with respect to such a huge population. This is mainly due to lack of
awareness among the people about insurance. Buying an insurance product is still
compared with investments in other financial securities. There is still no clear
picture even among the educated crowd that Insurance is an expense for protection
and an investment as such. With such a wide scope for insurance coverage and
penetration in our country, taking Insurance as a profession is still considered a
social stigma. Insurance industry is the least preferred one when compared to other
fields with respect to career and job opportunities. To reach the unreached crowd,
the insurance industry struggles to promote its products to the people through
various channels of distribution thereby creating awareness.
Nevertheless,
government of India is also taking initiatives to promote insurance protection to the
people.
4. The People behind
Now, it is clear that an insurance manager in general is a person who sells and
manage insurance. The role of such person can be well understood when it is
looked from the angle of role in business procurement.

Insurance Manager
Direct

Intermediaries

Agents

Brokers

Web aggregators

Insurance Marketing firm

Direct sales: Insurance companies have their sales team where by the
sales managers, team leaders procure their business by contacting their
customers. This direct selling can be either through online or through offline
mode. The responsibility of the sales manager is multifold as he has to find
the prospective customer, assess his risk with respect to life or non-life, find
out his risk bearing capacity, analyze the circumstances of underwriting such
risk by the insurer and finally suggest a best insurance product of his
company to the customer. Apart from selling the product, the respective
salesperson (here the insurance manager) is solely responsible for followup
with the customer for prompt payment of premiums, support him during
claims and be at the back of him till he gets the claim settlement. Hence,
right from the identification of a prospective customer, servicing him with risk
mitigation and supporting him till his claim settlement, these insurance
managers have a greater role. Although, it is a great advantage that he is
representing the company directly, there is always the other side of the same
coin that he is aware about the products of respective insurer only and he
may not know about the other competitive products offered by other
insurance companies to cover the same risk at much competitive price.
Moreover, the high attrition rate among the employee-sales managers in
insurance sector is also alarming that, a customer can never rely on a
particular insurance sales manager throughout his life.
Agents: Agents are the primary intermediary between the insurer and the
insured. Agents may be categorized as individual agents and corporate
agents representing both life and non-life insurance sector. A person can be
an agent with one life insurance company and one non-life insurance
company as per latest IRDA regulations. A person can become an insurance
agent only upon clearing IRDA agent examination. This mandatory issue
assures the quality of insurance selling.
Role of agents under IRDA regulations:
o

Full information must be provided to the proponent at the point of sale

to enable him to decide on the best cover or plan to minimize
instances of cooling off by the proponents.

o
o

An agent should be well versed in all the plans, the selling points and
also be equipped to assess he needs of the clients.
Adherence to the prescribed Code of Conduct for agents is of crucial
importance. Agents must, therefore, familiarize themselves with
provisions of the Code of Conduct.
Agents must provide the office with the accurate information about the
prospect for a fair assessment of the risk involved. The agents
confidential report must, therefore, be completed very carefully.
Agents must also possess adequate knowledge of policy servicing and
claim settlement procedures so that the policyholders can be guided
correctly.
Submission of proposal forms and proposal deposit to the branch office
immediately to avoid delays and to enable the office to take timely
decisions.
A leaflet or brochure containing relevant features of the plan that is
being sold should be available with the agents.

Brokers: As agents represent particular insurance company only, Brokers,

who are the professional people represent the policy holder. Hence, their role
is ultimately professional, with highest product knowledge, market knowledge
and better sales practices than any other form. Insurance brokers typically
work for the policyholder in the insurance process and act independently in
relation to insurers. Brokers assist clients in the choice of their insurance by
presenting them with alternatives in terms of insurers and products. Acting as
agent for the buyer, brokers usually work with multiple companies to place
coverage for their clients. Brokers obtain quotes from various insurers and
guide clients in determining the adequate policy from a range of products.
Reinsurance brokers solicit, negotiate and sell reinsurance cessions and
retrocessions on behalf of ceding insurers seeking coverage with reinsurers.
Reinsurance brokers can also be involved in a reinsurers retrocession of parts
of its risk.
Web aggregators: Web Aggregators compile and provide information about
insurance policies of various companies on a website. For example,
Policybazaar.com is an insurance Web aggregator and you would have seen
its television advertisement asking you to compare policies before buying.
The primary role would be to enable comparison across insurance products.
Aggregators will have agreements with insurers and insurers have to provide
all the relevant information. The Web aggregator, in turn, will display this
information in a set format on its website. Web aggregators, however, are
not allowed to display ratings, rankings, endorsements or best-sellers of
insurance products. They cant display any product other than insurance
products, nor can they carry advertisements.
Insurance Marketing firm: Insurance Marketing firm is an entity registered
by the Authority to solicit or procure insurance products as specified by IRDA

regulations 2015, to undertake insurance service activities as specified in

regulation 3(b) of these regulations and to distribute other financial products
specified in regulation 3(c) of these regulations by employing individuals
licensed to market, distribute and service such other financial products. An
insurance marketing firm is an entity that will be allowed to market insurance
policies along with other financial products such as mutual funds that are
approved by financial sector regulators. To sell these products there will be
two kinds of licensed individuals: an insurance salesperson, who will be
responsible for soliciting and marketing insurance products alone, and a
financial service executive, who will handle other financial services, such as
offering financial advice, sale of mutual funds and the national pension
system, or NPS.
5. Role of Insurance managers:
As players with both broad knowledge of the insurance marketplace, including
products, prices and providers, and an acute sense of the needs of insurance
purchasers, the insurance managers have a unique role indeed many roles to
play in the insurance markets in particular and, more generally, in the functioning of
national and international economies. Intermediary activity benefits the overall
economy at both the national and international levels: The role of insurance in the
overall health of the economy is well-understood. Without the protection from risk
that insurance provides, commercial activities would slow, perhaps grinding to a
halt, thus stunting or eliminating economic growth and the financial benefits to
businesses and individuals that such growth provides. The role of insurance
manager in the overall economy is, essentially, one of making insurance and other
risk management products widely available, thereby increasing the positive
effects of insurance generally risk-taking, investment, provision of basic societal
needs and economic growth. There are several factors that intermediaries bring to
the insurance marketplace that help to increase the availability of insurance
generally:
o

Innovative marketing: Insurance managers bring innovative marketing

practices to the insurance marketplace. This deepens and broadens insurance
markets by increasing consumers awareness of the protections offered by
insurance, their awareness of the multitude of insurance options, and their
understanding as to how to purchase the insurance they need.
Dissemination of information to consumers: Intermediaries provide
customers with the necessary information required to make educated
purchases/ informed decisions. They can explain what a consumer needs, and
what the options are in terms of insurers, policies and prices. Faced with a
knowledgeable client base that has multiple choices, insurers will offer
policies that fit their customers needs at competitive prices.
Dissemination of information to the marketplace Intermediaries gather
and evaluate information regarding placements, premiums and claims
experience. When such knowledge is combined with the understanding of the

needs of its clients, the insurance manager is well-positioned to encourage

and assist in the development of new and innovative insurance products and
to create markets where none have existed. In addition, dissemination of
knowledge and expansion of markets within a country and internationally can
help to attract more direct investment for the insurance sector and related
industries.
Sound competition Increased consumer knowledge ultimately helps
increase the demand for insurance and improve insurance take-up rates.
Increased utilization of insurance allows producers of goods and services to
make the most of their risk management budgets and take advantage of a
more competitive financial climate, boosting economic growth.
Spread insurers risks Quality of business is important to all insurers for a
number of reasons including profitability, regulatory compliance, and,
ultimately, financial survival. Insurance companies need to make sure the
risks they cover are insurable and spread these risks appropriately so they
are not susceptible to catastrophic losses. Intermediaries help insurers in the
difficult task of spreading the risks in their portfolio. Intermediaries work with
multiple insurers, a variety of clients, and, in many cases, in a broad
geographical spread. They help carriers spread the risks in their portfolios
according to industry, geography, volume, line of insurance and other factors.
This helps insurers from becoming over-exposed in a particular region or a
particular type of risk, thus freeing precious resources for use elsewhere.
Reducing costs By helping to reduce costs for insurers, broker services also
reduce the insurance costs of all undertakings in a country or economy.
Because insurance is an essential expense for all businesses, a reduction in
prices can have a large impact on the general economy, improving the
overall competitive position of the particular market. Of course, the insurance
cycle of hard and soft markets can have a significant impact on the
benefits both good and bad of increased availability. Generally, however,
increased availability benefits the consumer by leading to product
competition, price competition, and improved services. By reducing insurance
costs across markets, intermediaries make an important contribution to
improving the economic conditions in a country.

6. Behavioral and ethical aspects

Motivation: Insurance managers should have the skills of motivating
others, especially his colleagues, existing and new customers and the new
commers.

Morale: Morale of the insurance manager is judged by his ethical

behaviour and trustworthiness.

Communication skills: One of the most important set of skills that an

agent or service employee needs to possess, for effective performance in
the work place, is soft skills.

Unlike hard skills which deal with an individuals ability to perform a

certain type of task or activity, soft skills relate to ones ability to interact
effectively with other workers and customers, both at work and outside.
Communication skills are one of the most important of these soft skills.
o Communication and customer relationships
Customer service is one of the key elements in creating satisfied and loyal
customers. But it is not enough. Customers are human beings with whom
the company needs to build a strong relationship. It is both the service
and the relationship experience that ultimately shapes how the customer
would look at the company.
o Communication may take place several forms
Oral
Written
Non-verbal
Using body language
o Communication Process

Persuasive skills : Persuasion means influencing. Insurance managers

should have the ability of convincing and persuading the customers to buy
the apt insurance product for their protection. In doing so, an insurance
manager should be not unethical just to reach his target business figures.

A Better Way
The Holy Grail of persuasion, then, is to get others to buy into the idea, and want to do it
your way. And the best way of doing that is in a way that others dont notice. But how?
The fable of the sun and the wind is a good example:

The wind and the sun decided to have a competition to decide once and for
all who was stronger. They agreed that the winner would be the one who
could persuade a man to take off his coat. The wind blew and blew, but the
man only held on more tightly to his coat. Then the sun shone gently down,
and within minutes, the man took off his coat.
The moral here is that you cant force someone to do what they dont
want; instead, the art of persuasion is to get them to want what you
want.

Analytical ability:

When evaluating a customer's claim or calculating the cost for an

insurance policy, insurance professionals must exercise good analytical
skills. Insurance sales agents are responsible for reviewing financial data
to determine the best insurance policies and plans for their clients.
Insurance underwriters analyze insurance applications to determine
whether to extend coverage to a client. In some instances, insurance
underwriters need to review a person's credit score and medical
documents to determine the risk of insuring a client.
Customer Service Skills
Insurance professionals must be able to communicate with audiences of
all types. They routinely call potential customers and set up meetings to
obtain details about their finances. They also help policyholders settle
claims and organize events to sell insurance. Their work depends on
strong customer service skills as they recommend insurance policies
appropriate for their customers' lifestyles.
Organizational Skills
Because insurance professionals handle customer files and records, they
must have efficient organizational skills. They are also responsible for
handling policy renewals and organizing files on potential customers. A
good system ensures that a customer's file, which contain personal
information such as Social Security number, financial income and driving
record, is properly maintained.
Technical Skills
Insurance professionals must be comfortable working with computers and
making math calculations. They may use a variety of software, including
customer relationship management programs, to maintain customers' files
and underwriting software to review insurance applications. Because
insurance professionals must calculate premiums and amounts of
coverage, they should know algebra, calculus and statistics.