III IC-103 cheat sheet

Channel definition: any route through which an insurer reaches a customer and completes sale, servicing, and premium collection; common types are tied agency, corporate agency, bancassurance, broker, direct/online, and worksite or affinity marketing.

Principal–agent rule: the insurer (principal) delegates selling to the intermediary (agent); commission design must align the intermediary's effort with the insurer's persistency and profitability targets, not only new-business volume.

Remuneration trade-off: front-loaded commissions raise new-business volume but increase early lapse risk; renewal/trail commission and clawback provisions shift intermediary incentives toward policy persistency.

Channel economics: compare channels on cost per acquired policy, expense ratio, average premium size, persistency at 13/25/37/49 months, and complaint rate - a channel with low acquisition cost but poor persistency can be the most expensive overall.

Suitability and disclosure: intermediaries must assess customer needs, disclose commission or remuneration status, and avoid churning (replacement of existing policies mainly to earn fresh commission).

Segmentation rule: mass-market, high-volume simple products suit direct/online and worksite channels; complex protection, annuity, and commercial lines suit brokers and specialist advisers requiring needs analysis.

Regulatory control points: intermediary licensing and registration, fitness and propriety of sales staff, product approval before distribution, sales illustration standards, and record-keeping of advice given.

Channel conflict: when two channels pursue the same customer segment, define lead-allocation rules, exclusive product variants, and compensation parity to prevent undercutting and mis-selling.

Product-channel fit matrix: match product complexity, ticket size, and servicing need to channel capability; single-premium savings products fit bancassurance, while term protection with underwriting fits adviser-led channels.

Intermediary performance scorecard: track new policies, premium, persistency, complaint ratio, replacement ratio, training completion, and audit findings; weight persistency and complaints at least as heavily as volume.

Onboarding control: verify identity, qualifications, licensing status, and conflicts of interest before activation; document training on product features, anti-money-laundering rules, and conduct standards.

Compensation governance: cap commission as a share of first-year premium where regulation requires, pay renewal commission only on in-force policies, and recover commission on policies cancelled within the free-look or clawback period.

Digital direct channel: quote-and-buy journeys must still present key features, exclusions, and premium payment terms before purchase; consent and version of documents must be retained as evidence.

Monitoring triggers: lapse rate above channel benchmark, spike in replacement business, complaint concentration on one product or adviser, or premium leakage - each triggers targeted review or suspension of the intermediary.

Termination and run-off: on de-registering an intermediary, transfer servicing of orphan policies, notify customers of the new servicing route, and settle outstanding commission per contract terms.

Management information: report channel results monthly by product, region, and intermediary tier; variance against plan drives recruitment, training, or product-mix correction.