Distribution Channels Management in Insurance
The Distribution Channels Management in Insurance domain tests whether you can match each channel type to the legal capacity it holds, the customer segment it serves, and the economics of the insurer that appoints it. Questions cluster around intermediary roles, registration, remuneration, disclosure, and channel conflict.
Who acts for whom
- Individual agents and corporate agents act for the insurer. They offer the products of the insurer(s) that appointed them and cannot present themselves as comparing the whole market.
- Insurance brokers act for the client: needs analysis, placement across insurers, and disclosure to the client of the remuneration they receive.
- Bancassurance uses a bank's branches and customer base; the bank normally holds corporate-agency registration, so it distributes only for insurers it has agreements with.
- Direct channels (internet, telephone, insurer offices) reach buyers with no intermediary in the chain.
- Web aggregators display quotes from multiple insurers; they are not solicitors and cannot advise or conclude a sale.
Rules that generate marks
Registration before solicitation; solicitation only by trained, qualified persons; commission or fee within the regulator's caps; disclosure of remuneration; no rebating of commission to the buyer; a recorded suitability assessment before the sale.
Worked example
A bank asks whether it may (a) sell a life policy through its branches and (b) run a website comparing five insurers' premiums. Reasoning: (a) is bancassurance under its corporate-agency registration, limited to insurers it actually represents, with commission disclosed and no rebate offered; (b) is aggregation, so the site may display quotes but must not solicit or advise, and any resulting sale must pass to a licensed intermediary or the insurer itself.
Traps
- Treating agent and broker duties as interchangeable.
- Assuming a bank can advise across the entire market.
- Forgetting that rebating is prohibited even when the customer requests it.
- Blurring lead generation, which is widely permitted, with solicitation, which requires registration.