the

THE SELLING OF
INSURANCE PRODUCTS

Students Corner

Learning Outcomes:-‐
1. Art of prospecting
2. Ethical selling
3. Communication skills
4. Importance of after sales service
5. Customer loyalty building for persisting
6. Dos and Don’ts for Rural Authorized Person [RAP].

1. Art of prospecting

Prospecting is the art of finding out

probable buyers of insurance. It is major
activity, which leads to insurance selling. It
is not that everybody whom Rural
Authorized Person [RAP] meets will take
insurance. Out of 20 people met in a day
few say 8 to 10 may show interest in buying
insurance. Out of these even few say 2 or 3
may go in for actual buying.
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1.1 Who is a prospect?

Prospects are people who can pay for insurance. A
person with no income is not a prospect.
Prospects must have need [one or many] for
insurance. Cattle owners are prospect for cattle
insurance. Poultry farm owners are prospect for
poultry insurance. A person with responsibilities of
family needs of Life Insurance. Health insurance is
needed by everybody.

They should be able to pass the requirements of

underwriting fixed by the insurance company.
Finally RAP should be able to approach them.

1.2 RAP should first of all find out the prospects to

which he can approach and try for their
insurances. He has to prepare a list of such

To prepare the list of prospects, following methods

can be utilized
i) References: A relative, a friend or an
existing policy holder. These people may
provide reference to RAP, if asked for.
ii) Centre of influence: These are important
persons in area through whom others can
be approached. For example Sarpanch of the
village, Manager of the Gramin bank, Head
master of a school, etc.
iii) Nests: These are the large groups like
employees of a bank, members of gram
sabha etc. Once RAP gets entry in to their
circle selling becomes easy.
iv) Cold canvassing: This is meeting a person
whom RAP does not know and with whom
he does not have any introduction or any
meeting in past. This is a technique which
is effective; it helps in increasing customer
base.
v) Policy holders: Existing policyholders to
whom RAP has sold insurance in past can be
approached for new products/enhanced
cover.

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1.3 Pre approach: After classification of 2. Ethical Selling

prospects the RAP should prepare for meeting
In selling insurance, RAP’s main concern
them personally. But before meeting them he
should be to sell products which are
should collect the maximum information
appropriate for the needs of the customers.
about the prospects through various sources
Need Gap and advising suitable solution to
and prepare himself mentally as to what he
prospect is the most important for RAP.
would be talking to them and how he will be
trying to convince them to go in for particular Every RAP should follow ethical standards
insurance policies. when working as a RAP Ethical standards
1.4 Meeting with prospect: In meeting with depend upon the actions of selling and
prospect the RAP should present policy which servicing of insurance products, they relate
suits the requirements of the prospects. to best and right practices.
During discussion prospect should be told While selling insurance one has to behave in
about various advantages and deficiencies of ethical manner. This means that he should
the product. not suggest products which are not useful or
harmful to the clients.

If there is righteousness in the heart,

There will be beauty in character.
If there is beauty in character,
There will be harmony in the home.
When there is harmony in the home,
There will be order in the nation.
When there is order in the nation,
There will be peace in the world.

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Examples of unethical behavior:

i) Projecting very high benefits under a
plan: telling the prospect that his
investment in a life policy will become
double or five times in 3 years period.
ii) Not making complete and true disclosures
about the product and its features: tell the
client that every thing is covered. Like for
a house insurance say that it will cover all
the losses including collapse under a fire
policy, when it is excluded.
iii) Offer a rebate or inducement in return to
purchase a policy: parting with part of a
commission or paying the first premium
under the life policy are prohibited under
Insurance Act 1938 and are punishable
with fine of Rs 500.
iv) Unethical behavior is reflected in
overselling of insurance-‐ giving clients
policies of higher amounts on which he
cannot pay premium for the full term.
v) Under insurance: Not insuring client’s
requirement fully, just to show him less
premium is payable. For example issuing
only fire policy but not giving him
earthquake covers where the client’s
house is in earthquake prone area.
vi) Churning: in churning client is advised to
cancel the old policy and go in for a new
plan. This may earn high commission for
intermediaries but policyholder losses
heavily on cancellation of policies or
surrendering them.

Use of unethical means in sale of insurance is

called misselling and result in rejection, delay
in settlement of claim or client losing money
because of false promises. Misselling may be
beneficial for a short term in long term it
damages not only image and reputation of RAP
the insurance company with whom he is
connected with.

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skills
3.1 What is communication? principle that it is important ‘first to understand
before being understood’.
All communications require a sender, who How well you listen has a major impact on your
sends a message, and a receiver of that effectiveness, and on the quality of your
message. The process is complete once the relationships with others.
receiver has understood the message of the Active Listening: The most important aspect of
sender. listening is active listening where we consciously try
Communication may take several forms -‐ oral, to hear and also, more importantly, try to
written, non-‐verbal and using body language. understand the complete message being sent.
It may be face to face, over the phone, or by Active listening consists of:-
mail or internet. It may be formal or informal. a) Paying attention to the speaker
Whatever the content or form of the message or
b) Show him by your gestures that you are
the media used, the essence of communication
listening
is that whatever the receiver has understood is
the same which sender wanted to send. c) Provide feed back
During active listening stage it is important to allow
Communication can get distorted because of
the following reasons: the speaker to finish each point before
i) Impressions about the sender, there asking questions.
are some persons about whom
Responding Appropriately: Active listening
everybody believes that whatever implies much more than, just hearing what a
they are saying is not true. speaker saying. The discussion can be completed
ii) The message has been poorly only when the listener responds in some way,
through word or action.
designed, the different messages
being sent through verbal, written Empathetic listening: Being empathetic literally
and nonverbal forms. means putting yourself in the other person’s shoes
iii) Too much or too little has been and feeling his or her experience as he or she would
conveyed; lot of noise too little feel it.
substance.
Listening with empathy is an important aspect
iv) The sender has not understood the of all good customer service. It becomes
receiver’s culture. Difference due to especially critical when the other person is a
use of different language, body customer with a grievance and in a lot of pain.
language.
Empathy implies hearing and listening
The real challenge is to overcome these patiently, and with full attention, to what the
barriers other person has to say, even when you do not
agree with it.
Another important aspect of communication is
one needs to be aware about the importance of
listening skills. This follows from a well-‐known

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Importance of after sales service

Selling insurance is like selling a piece of
case of house insurance change in
paper of trust. Building trust is a continuous
occupation of the building.
process. Post sale service is an opportunity
vi) In case of claims advise client or
to consolidate and build that trust.
his legal heir (in case of death
claims) about the procedure to be
Insurance is service industry, it’s not a followed, forms to be filled up and
onetime sale of product but it is a continue documents to be collected and
process. If you provide good service without submitted to insurers. If there is
asking, the policyholder may refer your need of intimating to other
authorities like police, fire
name to others for their insurance needs.
brigade, local authority etc.
Insurance business is about building policyholder should be guided
relationships and keeping them. about.
Maintaining a good relationship is more vii) Follow up claims with insures for
important than just getting business from a faster settlements.
customer. That is why it is very important
to provide good after sales service.

After sales service in insurance includes the

following:

i) Delivering premium receipts and

policies.
ii) Reminding policyholder about
due date of payment of renewal
premium.
iii) Helping policyholder in making
payment to insurers by educating
him the methods and options of
payments available with him.
iv) Informing policyholder about
launching of a new insurance
product that may be suitable for
the client.
v) Advising policyholder about
informing changes in risk to
insurers and educating them
about the procedures to be
followed in affecting the change.
Example: Procedure for change in
nomination under life policy. In

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Customer loyalty building for persistency. 5.2 Benefits of persistency

a) Achievements of business targets

Customer loyalty is very important in for insurer and also for RAP.
insurance. If a customer remains with RAP b) The income of insurer and RAP
or with the company for which he works it increases as in addition to new
helps in growth of the company and also of business renewals are also part of
the RAP. There is no sense of bringing in the business income.
more customers and losing old ones, c) Costs of acquiring new business is
because more time, efforts and expenses much more than acquiring
are required to bring in a new customer but renewals.
to retain an old one it is not so. d) Customer is satisfied because over
a period of time he achieves what
Instead of always targeting for new he had planned at the time of
customers it is advisable to target changed taking insurance otherwise when
needs of old customers. This will insurance protection/ money is
automatically help in growth of the business needed it is not there.
and at the same time customer confidence.
Because of this increased confidence and 5.3 High level of persistency can be achieved
trust arising out of long term relationships by
the client may refer RAP’s name to his other
friends and relatives. 1) Need based selling: -‐ Always sell
appropriate policies designed for the
customers need. Number one cause of
In both branches life and non -‐life policyholder leaving is when he feels
insurance, it is important to retain that the policy which has been sold to
customer. it is more important in life him does not fulfill his need.
insurance where for a new policy the 2) Continues right advice: -‐ The
expenses and efforts are relatively higher policyholder must be advised
compared to renewals. throughout the life. For achieving this it
is essential that RAP must remain in
2.1 Effects of loss of old customers: touch with him. RAP must remind him
about all insurance related
i) If old customers are lost the information; including premium
RAP and the insurer both lose payment.
financially due to reduction in 3) Good servicing: -‐ The intermediary
business. should be available to policyholder at
ii) Policyholder lose benefits of all time for any type of insurance
insurance cover, if they do not related service; including claim
renew their insurances or
terminate before term by
surrender, cancellation etc.

For RAP it amounts to loss of commission

income

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m) He has to forward the information

6. Dos and Don’ts for Rural Authorized received from the policyholder
Person [RAP] regarding claim or any event likely to
cause claim, without delay.
Dos for RAP n) He has to communicate the insurance
companies’ decision regarding claim to
a) RAP has to conduct business with the claimant without delay. He has to
utmost good faith and integrity, with provide all reasonable assistance to
due care and diligence. claimant in pursuing the claim.
b) Identify himself as a Rural Authorized o) He has to ensure that the statements
Person, and show the licence if a made to customer regarding policies are
prospect demands it. neither misleading nor extravagant.
c) He has to provide information about p) He has to ensure compliance of
insurance products, on sale. While a) Section 64-‐VB of Insurance Act
advising the prospect to purchase a 1938.
specific insurance policy, he has to take b) Section 41 of the Insurance Act
into account needs of the prospect. 1938, by drawing attention of the
d) He has to keep all information given by prospect
the prospect, confidential. c) Anti Money Laundering [AML]
e) He has to disclose the commission he and Know Your Customer {KYC]
earns , if asked by prospect. guidelines.
f) He has to indicate premium that will be
charged by insurer. Don’ts for RAP
g) He has to explain the prospect the a) Do not to solicit or accept any insurance
information and other details, and its business without a valid license
importance that will be required for b) DO not induce prospect to omit any
insurance. material information in the proposal
h) He has to inform insurance company form.
about any adverse health conditions, c) DO not induce prospect to submit
personal habits or income wrong information in the proposal form
inconsistencies of prospect in a or the documents submitted to
confidential report, along with every insurance company for acceptance of
proposal. proposal.
i) He has to inform the consequences of d) Do not behave in discourteous manner
non-‐disclosure and inaccuracies to with the prospect, the policyholder or
prospect. the claimant.
j) He has to communicate promptly to e) Do not interfere with proposals
prospect about acceptance/ rejection of brought by others.
a proposal. f) Do not offer different rates and terms
k) He has to advise policyholder to effect than those offered by insurers.
nomination or assignment or change of g) Do not demand or receive
address or exercise of option, as the benefit/share out of insurance money
case may be, and provide necessary paid to the beneficiary.
assistance in these matters. h) Do not force policy holders to terminate
l) He has to provide assistance to the existing and to effect a new policy within
policyholders/ claimants/ beneficiaries three years from the date of such
in submitting requirements for the termination.
settlement of claims to the insurance
company. from proposal.

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LEARNING POINTS