MR Microinsurance_2012_03_29.indd - International Labour ...

492 Delivery channels and intermediaries
22.2 Comparing the distribution channels
When considering the examples in Table 22.2, four categories of distribution
channel emerge: 1) cash-based retailers; 2) credit-based retailers; 3) utility and
telecommunications companies; and 4) third-party bill payment providers.
Th ese categories refl ect the distribution partner’s primary business and the
nature of their interactions with clients. Similarities in the types of products
sold, sales interaction, and the premium collection and claims processes for each
type of distribution channel are summarized in Table 22.3. An analysis of these
four categories provides a number of useful insights about their relative eff ectiveness.
Table 22.3 Characteristics of the distribution channels
Products Sales Premium collection Claims
1 Cash-based retailers Simplifi Simplifi ed personal personal Limited, un-incen- un-incen-
Cash premiums
Claims directed to
e.g. supermarkets accident and life tivized sales interac-
paid in-store, with
insurance company
and clothing retailers (funeral) insurance tion between retailer
optional debit order
rather than retailer
policies
staff and client payment available in
some cases
2 Credit-based Credit life, extended
Active, incentivized,
Bundled premium
Claims facilitated
retailers e.g.furni- warranties, personal
face-to-face sales by
collection and credit
in-store
ture and white goods
accident and life
retailer sales staff ;
repayments
store
insurance
passive sales in South
Africa due to market
conduct regulation
3 Utility and tele- tele-
Disability, unem- unem-
Multiple sales chan- chan-
Premiums are bun- bun-
Claims directed to the
communications
ployment, personal
nels including mail,
dled with client’s
insurance company;
companies e.g.elec- accident and, in
out-bound call cen-
utility or phone bill
in some cases, benefi t
tricity, gas and fi xedsome
cases, house-
tres and face-to-face
and collected using
payment is made
linetelecommunicahold structure insur-
sales
existing bill payment
directly to client’s
tions companies
ance
system
utility or telephone
account
4 Th ird-party bill
Personal accident
Limited (un-incen- (un-incen-
Cash or electronic
Claims are made
payment providers
and life insurance
tivized), sales inter-
collection point
directly to insurance
including wireless
action between bill
company
access services pro-
payment operator’s
viders (WASPs)
employees and client
A key diff erence between these channels is the type of sales practices that they
employ, which has implications for the product that they can off er, the volume of
customers that they serve, and the value that they can provide to low-income
households.
Staff members of cash-based retailers generally do not actively engage with
customers or “push” merchandise during the sales transaction, making it diffi cult
to enhance the performance of the existing sales force. Th e lack of active selling
by retailer staff has led cash retailers to rely primarily on passive or “off -the-shelf”
sales. As a result, their product range is limited to simple, group-underwritten
personal accident and funeral policies (see Chapter 10).
Maintaining the persistency of their policies poses a challenge for cash-based
retailers, because the retailer often does not have an automatic premium-collec-