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Friday, May 16, 2008

SBI Life Insurance

Creating the “pull” in Life Insurance

Insurance has a very strong sales focus. There are other financial services like mutual funds where people themselves take the initiative and contact the companies or agents. But for life insurance, invariably the buyer is never the initiator. The agency model of life insurance companies involves a number of insurance agents who work under a sales manager. These may be house wives, retired people or even professionals looking for some extra income. Their job is to contact people, understand their specific needs and offer a customized insurance plan to them to cater to their needs.
Needs could be a) Retirement planning b) Protection against untimely death c) Saving for future children’s needs d) Saving a lump sum for an event like buying a house ect e) Investment option for superior returns ect.
These needs are there for every one of us. But it is the insurance agent who makes us realize them. This realization is the first step towards convincing the consumer to go for buying the insurance policy. The pull factor, so important in sectors like FMCG, as represented by the famous AIDA model is not there in life insurance. The communication and advertising strategy in FMCG aims at creating the Awareness for the product, sparking the Interest of the buyer towards the product and invoking a feeling of Desire for the product in the minds of the buyer. This leads to Action in the form of the consumer buying the product.
In life insurance on the other hand, awareness is created by the insurance agents. The desire and interest part is absent. This is also so because up till recently and even now insurance was and still is associated with the happening of a negative occurrence. Such an association can only arouse an obligation to buy the product to fulfil a responsibility, never a positive desire or interest.
Now with so many private insurers battling it out in a very competitive market with low penetration levels, the pull factor has also become very important. If there are sixteen plus new players with similar products, how would you stand out? In a market where a new product can be very easily replicated, what would be your differentiating factor?
The need for brand differentiation and the need for life insurers to reach out to consumers has led to huge investments by life insurance companies on promotions, advertisements ect. For an industry where the perception is that a “product can only be sold, never bought”, these efforts are creating a “pull” factor for the first time in India.
Another dramatic shift is the repositioning of life insurance as a positive thing. No longer is life insurance associated with the image of a widow, as seen in earlier LIC advertisements, who said that after her husband’s death, “LIC ne hamain bahut sahara diya”. Now, it is about Sachin Tendulkar talking about “Kal par Control” and about securing your child’s future though Aviva’s plans. It is about the elderly couple as seen in ads of Max New York Life and others who are alive and together in their old age and enjoying every bit of it, all thanks to retirement planning through insurance.
It would be a long way to go when a significant portion of the population would go out and buy life insurance on their own, like they do for FMCG or Telecom products, but the efforts of private insurers are helping create a “Desire” and “Interest” in the minds of the Indian consumer for life insurance.