Selling Insurance Products in India: The Commission versus Fee Debate


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Case Details:

Case Code : MKTG240
Case Length : 19 Pages
Period : 2008-2009
Pub Date : 2010
Teaching Note :Not Available
Organization : -
Industry : Insurance Industry
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

During the nineteenth century, the insurance industry in India was controlled by British Insurance Companies such as Oriental Life Insurance Company and the Triton Insurance company . The dawn of the twentieth century witnessed the launch of indigenous insurance companies such as Indian Mercantile Insurance Limited...

The Proposal

According to the proposed fee-based system, insurance agents would charge a fee for the services rendered instead of getting a fixed upfront commission out of the premium paid by the consumer.

The fee could be negotiated with the person buying an insurance product...

Implications

Analysts opined that the adoption of a fee-based model would affect insurance agents, investors, and insurance firms. For insurance agents, scrapping of commission payments would severely impact their livelihood. Experts pointed out that zero commission would mean no performance incentive for the agent. Most of those who relied on commissions from insurance policies would lose their earnings...

Excerpts Contd...>>

 

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