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Allowing insurers to conclude contracts over the phone will definitely bring down the cost of insurance on low value covers. According to Trevor Bull, managing director, Tata AIG Life and member of a regulatory panel on distribution channels, said that this channel would help the insurance industry reach out to a section of customers who do not want to deal with agents.
The sale of insurance policies over the phone makes it easier and more cost effective. The more cost effective it is, the lower will be the premium paid by the customers. At present, direct marketing involves a two stage process where, in the first stage the prospective buyer is convinced to buy a policy, and at the second stage a representative or agent approaches the person for a signed proposal. This two step process makes the transaction more expensive and reduces the rate of conversion.
The committee has suggested that the Indian regulator could consider allowing insurance companies to conclude a proposal through the telephone instead of insisting on a signed insurance proposal form. The condition was that the conversation should be recorded and retained for at least two years for proof and further proceedings.
When insurance regulations were first drawn up, the technology for recording and storing voice conversations was not widespread. Today, most companies already record conversations between tele-callers and customers on grounds of monitoring quality. Insurance transactions over the phone would protect the interest of clients better as compared to a signed proposal form. For instance, in the case of proposal forms, there could be a case where the insurance agent disregards material facts that are disclosed to him by the proposer. But in the case of telephonic contracts everything is on record. The insured person has also the option to change his mind as the 15-day ‘free-look’ period will be available. The insurance cover begins instantly, the moment the payment is effected.
This concept may be new for India but in countries like Korea, such direct sales account for close to a fifth of sales. Insurance companies receive calls from prospective customers following an advertisement or E-mail campaign. The tele-caller explains the terms of coverage and concludes the contract over the phone, and also receives payment by either debit/credit cards or through funds transfer system. The total process saves a lot of time and money for both sides and is mutually beneficial.
By: suhani
Article Source: www.ArticlesBase.com
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