A handy guide to insurance distribution

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Reading Time: 4 minutes

Key Takeaways

  • Insurance distribution is the process through which insurance reaches customers.
  • Insurers took the pandemic as a chance to strengthen their existing relationships in the traditional face-to-face model while developing alternatives to meet the full range of customer needs.
  • For many businesses, “insuring” is a complicated process. Having distribution channels in place allows consumers to access and buy insurance products more easily.

Simply put, insurance distribution is how insurance is spread and how it reaches you, the end customer.

According to the central government’s economic survey of 2020-21, India’s insurance coverage penetration is at 3.76%. While the market size of the online insurance business was valued at $15 billion, the penetration is extremely low against comparable countries.

In places where this penetration rate is low, it has immense potential for opening up a digital premium market.

What are the major channels of insurance distribution today?

For many businesses, “insuring” is a complicated process. Having distribution channels in place allows consumers to access and buy insurance products more easily. Every insurance distribution channel needs different resources to be effective. What determines the structure, strategy and placement in the market is the type of insurance model one follows.

Some of the major insurance distribution channels that insurers can leverage today are:

Direct distribution channel – Direct distribution, insurers directly reach out to customers without any middlemen. With more and more people becoming tech-savvy, online channels of advice and transaction capabilities are most needed now. Examples of direct distribution channels in insurance are – websites, social media platforms, online channels, e-commerce portals etc. Such a distribution channel operates and encourages self-service among customers and independent decision making.

Assisted distribution – Agents and brokers are the most common ways through which insurance is distributed in India. The traditional face-to-face channel of distribution is still very popular with the integration of tech-related models. They are important for insurance advising and managing complex insurance products. Experts also suggest that using analytics solutions will increase the sellers’ knowledge and skills.

Affinity-based insurance distribution – In such distribution channels, products are sold along with other products. It is usually embedded into a buying journey. A common example of this is getting insurance along with booking your flight on several aggregator websites.

How is insurance distribution changing in India?

The pandemic has changed the dynamics of the insurance sector in India. With COVID-19,  a lot of uncertainty came in, which insurers believe boosted the demand for insurance products.

From being a product that is pushed on to customers, insurance is now becoming a pull product. A big reason behind this is that insurance companies are shifting to distribute insurance through digital channels.

Insurers took the pandemic and the digital medium as a chance to strengthen their existing relationships in the traditional face-to-face model while developing alternatives to meet the full range of customer needs.

Upcoming trends in insurance distribution

Modernization of distribution channels – With the challenges of the pandemic, insurers will have to think of new ways of establishing customer relationships. To do this, they must rethink their distribution model across customer groups. As per a BlackRock survey, 71 per cent of insurers plan to adapt to the digital medium to strengthen their distribution strategies in a post-COVID world.

Customer-focused solutions – With the advent of the internet, customers today are more aware of insurance products and expect customised products as per their requirements. 24/7 call centres, chatbots, time-saving term insurance purchase, insurance renewal, claims settlement – these are some of the places where customers are looking for a more personalised and customised approach.

Access to digital tools – Through online mechanisms, policyholders can now upload premium documents, make premium payments at one’s leisure. This self-service function ensures customers have greater agency and say in how they would like their policy to be personalised to suit their needs.

Automated claims management – With insurance firms investing in automation and digital processes, there is going to be an increase in the return on investment (ROI). With automated claims management, customer satisfaction is increased due to better service and faster processing time.

Personalization of products – In the long run, flexible options, and microinsurance will become popular. An example of product personalization is how most auto-insurers promote usage-based insurance. Regulatory frameworks will try to accommodate short value chains while reinsurers will provide risk capital to digital brands.

Advanced analytics – Many insurers use predictive analytics to collect a variety of data in order to evaluate and understand customer behaviour. Doing this has proved to increase revenue for insurance companies. These analytics are used for – adjusting policy prices, segmenting users and needs dynamically, optimizing business strategies, and identifying new growth opportunities. With the help of automation, businesses can scale up with ease and transform insurers into active risk managers.

InsurTech partnerships – InsurTech firms are steadily growing in all areas like auto, homeownership and cyber insurance. Such imaginative partnerships will lead to new models, revenue for more profitability and reduced operational costs.

Blockchain technology – As an insurance technology, blockchain is still in the infancy stage. However, it is believed by the experts that its impact will be seen in – enhanced efficiencies, fraud detection, consumer trust, and prevention and improved claims processing. This technology also reduces operational costs and offers fraud management and the availability of reliable data.


How can you get started?

Assurekit is built with the focus to simplify your journey to distributing insurance with technology. If you are interested, join our mailing list and be the first to know when we launch and get behind the scene to look at what we are building. For more information, reach out to us at hello@assurekit.com.



Convenience is key to the new generation of insurance consumers. In countries like India, where insurance buying is not mandatory, insurers will have to put in a lot more effort to have a higher market penetration rate. It is imperative insurers invest in technology, making insurance policies more accessible to the tech-savvy population through distribution channels of their choice.

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