nottheaverageactuary

Actuarial news and views from Cape Town and beyond

Non-traditional vs traditional distribution channels

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The traditional distribution channel used by insurers are brokers. In Africa,  seeing as many parts consist of rural populations, insurers have identified the urgency of adapting non-traditional distribution channels in order to successfully sell products designed for this class of business. The bancassurance model is well adopted by most insurers in South Africa. Essentially the insurer sells its products via a bank with whom they usually partner with. Liberty Holdings Ltd partnered with Standard Bank and in 2013 reported a major contributor to new business in the retail sector was attributed to bancassurance ( contributing 39.5% to new business). It is worth noting that brokers typically dominate methods of distributions in attracting corporate customers.

In their Insurance Industry Analysis for 2014, PwC, also looked at the impact that technological advancements have had for insurers. Although it was proposed that this may lead to a fundamental redefinition of role of advice insurers offer, I imagine it will take a substantial amount of time before simplicity and convenience of online purchases trump willingness to buy. Afterall, many are incentivised to buy insurance products once they are convinced they will indeed need it and this typically comes from the subtle coercion insurers make via marketing and direct distribution channels.

Sources:

https://www.pwc.co.za/en/assets/pdf/insurance-industry-analysis-march-2014.pdf  [Available: 1 April 2016]

https://www.google.co.za/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&cad=rja&uact=8&ved=0ahUKEwjq9fqP-u3LAhVDmBoKHczmDM8QFghIMAg&url=http%3A%2F%2Fwww.libertyholdings.co.za%2Finvestor%2FDocuments%2Fcredit-rating-analysis.pdf&usg=AFQjCNEox6-VlJI3hQJH7Iwk74sBnWvNPQ&sig2=z7ZU5sj4QmeVfOhK61h_Aw&bvm=bv.118443451,d.bGg [Available: 1 April 2016]

 

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One thought on “Non-traditional vs traditional distribution channels

  1. Interesting article, thanks Chanty. Quite relevant as the blog Sinjum posted recently also pointed out how sales have increased via bancassurance as distribution channel. I guess now the challenge remains for insurance companies to design products that truly meet the needs of this target market.

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