Question
In: Finance
Discuss the major types of insurance marketing systems and highlight the differences between them.
Discuss the major types of insurance marketing systems and highlight the differences between them.
Solutions
Expert Solution
Marketing systems are another term for distribution system for the insurance products. These are the various methods how insurance products are sold. Major types of marketing systems are:
1) Personal Selling Systems: This system indicates sale through insurance agents. The agent generally represents one insurance company and he receives commissions for every insurance policy sold.
2) Financial Institution Distribution Systems: The insurance companies leverage the large network of commercial banks and other financial institutions. They partner with such institutions and try to bundle insurance products along with the financial institution's products such as insurance on credit cards, etc.
3) Direct Response System: This is a system where the insurance products without any agent. The products are chosen by the customers themselves. This system lowers the cost to the insurance company as they do not have the agent/broker's commissions. It is easier to sell simple products such as term insurance through this system.
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