Question

Please research the following methods of insurance distribution and prepare a TWO PAGE REPORT in which you

• summarize each method

• describe the advantages and disadvantages of each method

• what you think the future holds for each method

Distribution methods:

1. Through the use of captive agents, who represent one company, such as State Farm or American Family.

2. Through the use of independent agents who represent several companies. Each of our communities have several independent agencies.

3. Through the use of online insurance marketers such as Geico and Esurance.

Answer 1

Let us first understand what does insurance distribution means . It means to sell or propose to sell or put an advise to buy insurance products through insurance contracts . This distribution is done three major methods . These methods are :

A. Captive Agents

B. Independent Agents

C. Online Insurance Marketers

The objective of these distribution channels is to make sure that potential insurance consumers has easy access to the most of the insurance products available in the market and they can purchase these products in the most efficient and effective manner .

Now let us describe in details these three distribution methods in details .

A. Captive Agents : These could be the representative of any company which is into insurance business . Here the distribution method is a direct one as the trained employees of the insurance company gets into the act of selling insurance products . They are salaried and they get incentives & bonuses on the sales targets they achieve . They are more into helping the customers make informed decisions . They explain everything that is there in the policy contract . They generally engage a number of independent agents for selling their company’s product . Their primary role is to engage , train and motivate these independent agents to generate more and more business for their company .

B. Independent Agents : These independent sell insurance of several companies who are into insurance business . We have a number of these agents around us in our society . These agents have to be registered in the country of their operations and they have to meet certain minimum requirements . These are used by insurance companies to penetrate into the markets as there is no limit on the number of these agents can be engaged by an insurance company . These are paid commissions on every sale they execute and get special incentives & bonuses on meeting certain periodic targets . With passage of time they become insurance advisors as they become friends with their customers . Today these independent agents makes the best use of technology which is also making its presence felt in insurance business . Insurance has always been a tough subject for insurance consumers to understand . Those who want to understand the insurance product fully generally engages these insurance agents as these are easily accessible in odd hours ,  on holidays and on weekends .

C. Online Insurance Marketers : Today we have a plenty full of insurance marketers where through online websites we can buy insurance products . This is the most popular method today as the buyers are getting more & more educated about these products and we have a plenty full of millennials today who do not understand anything else other than technology . These young guns do not have time as this is the shortest of the methods where every thing is done online in few seconds .