Innovative Channel Strategies in Insurance Industry:
An Exploration

Authored by
K. Srinivasan
Jansons School of Business
Karumathampatti, Coimbatore - 641659
E-mail :  /


Suddenly Insurance has come to be a way of life.  Even though many of the private Insurance Companies came into the market during 2001, only now the market is highly dynamic. In India, Insurance has been synonymous with LIC. Life Insurance Corporation (LIC) was created as an entity in 1956 through LIC Act.  Since then, until recently (2000), the insurance sector, both life & non-life was monopolised by public sector Insurance corporations.

Now, with the impact of LPG (Liberalisation, Privatisation and Globalisation), many private business houses have come up as joint ventures, with partnerships from multinational insurance companies.  The Private players are introducing innovative insurance products, appointing qualified persons as agents and advisors.  They are aggressively promoting their products and are going for multi-channel distribution.

Insurance, a service industry needs to address seven marketing mix elements, unlike the 4Ps in manufacturing industry.  The service marketing mix known as 7Ps consists of Product, Price, Promotion, Place, People, Physical evidence and Process.

Though all mix elements are equally important, the more conspicuous and dynamic mix elements of Insurance at present are product, promotion and place.  A number of innovative products have come up in the industry and to make the consumers aware, the promotion campaigns fill much of the Insurance companies' budget.  Though there are distinct strategies in product and promotion mixes, this paper focuses on exploring the innovations in distribution mix.

REACH – REACH – REACH – The mantra…in Insurance industry

Although distribution has its own mix, Insurance, being a service industry the prime distribution mix element is channel mix. This paper concentrates on the innovative channels surfacing in Insurance industry.

To deliver the services, players in Insurance take various routes to reach and service the customers. With just 70 million insured out of 1000 million, there is enormous potential in the industry. 

Traditionally, the Channel member has been the 'Insurance agent'. Some private insurance companies now call them advisors.  Never the less agents form the prime front line force with all insurance companies and they remain to be the most basic and most important channel members to reach the customers.  Tata AIG is one of the major users of agents among the private players.  Presently Tata-AIG has 9000 agents and has already set a medium term target of having an agency force of five lakhs agents in the next five years.

Apart from agents, the insurance companies take various innovative routes to spearhead their marketing plans and to capture a larger pie of market share.

Innovative Channels

"Spreading the tentacles to the longest length and the remotest corner" is the mantra of Insurance players. To reach this objective, their distribution channel strategies have taken different 'avatars' like
Corporate agents, Bancassurance and Retailassurance etc.

A peep into each of the above would help in understanding them better.

Corporate Agents

Corporate agency is a cross selling type of channel.  Insurance companies tie-up with business houses in other industries to sell insurance either to their employees or their customers.

Insurance industry, during the past 2 years has witnessed a number of such strategic tie-ups and alliances. Corporate agents have become a major force to reckon with in distributing insurance products.

The following table throws light on the extent of utility of corporate agents.

Table.1. Corporate agencies (Life & Non life):

Insurance provider

Corporate agent

Type of Insurance

TATA AIG General


Personal accident insurance cover scheme on two  wheeler tyres.


Motor insurance at petrol fitting statutory

Thomas Cook

Travel Care – a travel insurance

Bajaj Allianz General

Maruti Udyog, Hyundai & Ford

Auto Insurance

HDFC Standard life

JRG Financial Services

Marketing of life insurance & pension products

AMP Sanmar

Trade wings (a travel agency), Dhandapani Group
& Karvy Consultants.

Marketing of life insurance policies


Tata Tea, Khaitan's Williamson Major, Bridge foundation

Rural Policies


Simply put, Bancassurance means distribution of insurance products through banks.  This mode of selling risk products through banks is fast gaining ground.  Almost all insurance players have married to one or more banks for wider reach and increased trust.  Bancassurance may sell insurance as customised solutions or in the form of bundled products along with bank products. Even though banks are considered as one among the corporate agents, bancassurance has gained a great importance that it needs to be discussed separately.

The importance can be understood from the fact that even SBI life is associating with public, private sector and co-operative banks for providing life insurance to the account holders, in spite of being an offshoot of Indian's largest bank.

Last year's amendment in the Insurance bill allowed bancassurance to piggy back on nearly 66,700 bank branches with over 18 crore accounts.  Also, there are advantages of speedy reach to market and lower infrastructure costs. Banks get 7-15% commission. While bancassurance's share in insurance is 50% in Europe, 20% in US; in India we are utilising <5% of the total number of bank branches. ICICI prudential is the topper in bancassurance with 15% and with a contribution of Rs.470 crore. 

Bancassurance is poised to become a key determinator / differentiating factor in the Insurance industry. With banks are all set to encourage their staff to sell policies, with enough training, this will take of to great heights.

Realising the importance of bancassurance, both life and non-life insurance companies have started piggy backing on banks for pushing their policies.

The present status of bancassurance can be understood from the following display.

Table.2. Bancassurance: Win-Win Relationships

Insurance Company

Partner Banks (Total No. of Branches)

ICICI Prudential

ICICI Bank, Bank of India (2,524), Citibank (15), Allahabad Bank, Federal Bank (120), South Indian Bank, Lord Krishna Bank, Punjab and Maharashtra Co-Operative Bank.

SBI Life

SBI (9,000), associate banks (4,000)

Birla Sunlife Insurance

Development Credit Bank (62), Deutsche Bank (3),
Citibank (15), Bank of Rajasthan (348), Andhra Bank,
Catholic Syrian Bank (329), Bank of Muscat (1)

ING Vysya Life

Vysya Bank (450)

Aviva Life Insurance

ABN Amro (12), Lakshmi Vilas Bank (212),
American Express (6), Canara Bank (2,421)

Royal Sundaram Alliance

Standard Chartered (63), ABN Amro (12), American Express (6), Citibank (15)

United India Assurance

Indian Bank, South Indian Bank (372), Andhra Bank (1,018)

HDFC Standard Life

Union Bank, Indian Bank

Life Insurance Corporation

Corporation Bank (800), Central Bank (3,115), Bank of
Punjab (20), Andhra Bank (1,018), Nedungadi Bank (150)


Karnataka Bank (356), Dhanalaxmi Bank (153), J&K Bank (150)


'Insurance Products are being sold at retail outlets'.  This news should convey the message that Indian Insurance industry is really boiling.  Not only the Insurance players but also their distribution partners are very much interested in this kind of game plan.  The office of the Chief Post-Master General, Chennai has mooted the idea of selling some of the insurance products through Post Offices. With 1.53 lakh post offices in the Country, more than twice the number of bank branches, it can really be a channel with very great potential. Medicine shoppe, a pharma chain store group and Bajaj Allianz have tied up to provide free insurance cover of Rs.2/- on every purchase of pharma products worth Rs.1/-. This scheme is open to 5-25 years age group, and distributed through its 40 outlets.

Also insurance selling has gone the 'corner shop' way, with TATA –AIG's plans to sell the policies at petrol bunks.


It is certain that Indian Insurance players along with their foreign partners are trying to grab the under explored Indian market. Though these are few innovations in the marketing Channels of Indian Insurance Industry, it is expected that they will try more innovative Channels as the industry grows. Innovatively, SBI life has offered group insurance to the employees of public sector companies, including their spouses.  Also similar covers were offered to even the state Governments for their liabilities.  Given the aggression with which they progress, surely these innovations are going to be a big hit and a metamorphosis of Indian Insurance sector is very much on its course.


    1. 'Ceat, Tata AIG Launch Insurance Scheme' Financial Express, April 17,2003.

    2. 'Medicine Shoppe to offer free Insurance Cover – ties up with Bajaj Allianz', Hindu Business Line Feb-22, 2003.

    3. 'Non-life insurance Companies Woo banks for Customers', The Economic times, Oct.05' 2002.

    4. 'You can buy insurance at petrol bunks too' Hindu Business Line, August 27, 2002.

    5. 'Thomas Cook Launches Travel Insurance' Financial Express, May 16, 2002.

    6. 'Bajaj Allianz rides piggyback on MUL', The Economic Times, March 07, 2002.

    7. 'HDFC standard tapping corporate agency route', Hindu Business Line, January 08,2003.

    8. 'ICICI Prudential, Birla Sun Life draw up new plans', Financial Express, December 19, 2002.

    9. 'AMP Sanmar to tap small towns in TN', Hindu Business Line, December 5, 2002.

    10. 'Insurers find banks very active agents', Business Standard, November 25, 2002.

    11. 'SBI Life in Marketing talks with banks', Hindu Business Line, November 14, 2002.

    12. 'Tata AIG plans to rope in Group Companies to sell rural policies', The Economic Times November, 02, 2002.

Jansons School of Business
Karumathampatti, Coimbatore - 641659
E-mail :  /

Source : E-mail June 11, 2004




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