Chapter 7

MARKETING AND SALES

1
INTRODUCTION
 Gaining market share is one of the objectives in most insurance
companies and this is achieved through marketing and sales function
 The concept of marketing require active support from every facet of the
company, from product development to sales material and sales training
to the closing of sales
 With steep competition, each insurer has to deploy the best marketing
techniques in coming up with the right product and pricing to meet
consumer needs.
 Products have to be marketed through its own distribution channel.

2
GUIDELINES ON MARKETING AND SALES
 Apart from internal guidelines on marketing and sales to promote growth and profitability,
regulators and related associations also issue guidelines
MALAYSIAN AUTHORITIES
 BNM is the monetary body that oversees Malaysia’s financial system and economy to
promote financial stability and growth
 Under FSA 2013, one of the main objectives is to strengthen business conduct and
consumer protection requirements to promote the use of financial services and products
by customers
 In relation to marketing and sales, the related guidelines issued by BNM:
 Introduction to New Products by Insurers and Takaful Operators (BNM/RH/STC 029-10) (“the Revised
Policy”) Issued by BNM on 15/5/2015
 Guidelines on Product Transparency and Disclosure issued by BNM on 31/5/2013
 Guidelines on Medical and Health Insurance Business (revised) issued by BNM on 11/8/2007

3
INTRODUCTION TO NEW PRODUCTS BY INSURERS AND
TAKAFUL OPERATORS

 The Revised Policy set out the regulatory requirements for the offering of
new insurance and takaful products and BNM’s expectations regarding
the management and control of risk associated with the
 development
 offering
 marketing
 of those products by the institutions
 It addresses the responsibilities of the institutions towards consumers in
ensuring that the needs and rights of consumers are respected
 Consumers are clearly and fully informed of the nature and risks
associated with the products

4
INTRODUCTION TO NEW PRODUCTS BY INSURERS AND
TAKAFUL OPERATORS

 All the three guidelines must be read together

 The objectives of the Revised Policy are to:
a) improve the time-to-market for licensed insurers and takaful operators to introduce
new products or to effect changes to existing products
b) promote sound risk management practices in managing and controlling product risks
by ensuring the appropriate assessment and mitigation or risks during the product
development and marketing stages
c) further strengthen the duty of care owed to consumers in ensuring that products
developed and marketed are appropriate to the needs, resources and financial
capability of target consumer segments; and
d) ensure adequate and accurate documentation of information on new products in the
submission of the product documentation to the bank
 (refer to page 170 to see definition of what is a `product’ and `a new product’)

5
INTRODUCTION TO NEW PRODUCTS BY INSURERS AND
TAKAFUL OPERATORS
 The Revised Policy also reflects the following requirements:
a) Responsibilities of approving authority must be identified to product approval of “new products” for the
purpose of product approval specified in the revised policy
b) Declaration by CEO for product documentation (“PD”) as per the “launch and file” system requirements
with complete submission of information as to:
i. the information on new products
ii. the supporting information and documents; and
iii. the context of the product documentation and supporting information
 The “launch-and-file” for general insurance is only applicable to medical and health insurance
c) Insurer must set in place a sound product management program for the development of appropriate
policies and procedures for managing product risks. Must have in place procedures to identify, assess
and mitigate risks associated with new products offered by insurers, including procedures related to
reinsurance, retakaful, underwriting and diversification and the profitability assessment and
quantification of financial impact for the new products and
d) Summary of product development considerations, financial impact analysis and product risk
management

6
GUIDELINES ON PRODUCT TRANSPARENCY AND DISCLOSURE
ISSUED BY BNM 0N 31/5/2013
 These guidelines were implemented to help consumers in making
informed decisions on acquiring financial products and services
 This is to protects the customers’ interests and understanding of the
products and services that they are buying from the pre-contract stage to
fund purchase
 They are well informed of the product and it meets their neds and
affordability
 Insurers are required to ensure proper and adequate disclosure of the
general and specific information pertaining to MHI products
 They must ensure their marketing and sales material and practices are in
line with the requirements of the guidelines

7
GUIDELINES ON MEDICAL AND HEALTH INSURANCE BUSINESS
(REVISED) ISSUED BY BNM 11/8/2007

 These were issued specifically for all MHI products underwritten by both the
general and life insurers
 The guideline is applicable to all types of MHI products including:
a) Medical expense or hospital and surgical insurance (HSI)
b) Critical illness or dread disease insurance
c) Long-term care insurance
d) Hospital income insurance; and
e) Dental insurance
 This Guideline makes reference to the `HSI Guide’ adopted by LIAM and PIAM
 The insurer has to adopt the definitions of the HSI Guide where applicable in
MHI products (eg terms of a particular benefit , definition, conditions or
exclusions included in its policies
 This is to standardize the common definitions for consumer understanding and
to avoid mis-selling or misinterpretation among insurers
8
GUIDELINES ON MHI (REVISED) ISSUED BY BNM ON 11/8/2007
 Should the insurer impose a limitation on benefits as stated below, the insurer shall observe
the standard intended to preserve a reasonable degree of minimum protection to policy
owners:
a) Waiting period shall not exceed 30 days from the effective date of the policy and shall
not apply to any injuries arising from an accident;
b) Specified illness shall not exceed 120 days from the effective date of the policy (illness
shall be limited to the list as specified in the HIS guide
c) Pre-existing conditions shall be limited to disabilities, which existed before the effective
date of cover and for which the policyholder should have reasonably been aware of;
d) Co-payment under cost-sharing or co-insurance shall not exceed 20% of the claimable
expenses (excluding deductibles) per disability subject to an absolute maximum limits
of RM3000 (inclusive of deductibles) per disability. The limit is not applicable to co-
payment on upgraded room and board, policies exceeding RM100,000 and major
medical expense policies
 (refer to commission table on page 172 –table 7.1)

9
INSURANCE RELATED ASSOCIATIONS
 the insurance related associations are:
a) Persatuan Insurans Am Malaysia (PIAM)

b) Life Insurance Association of Malaysia (LIAM)

c) Malaysia Takaful Association (MTA)

10
PERSATUAN INSURANS AM MALAYSIA
 PIAM is the national trade association of all licensed direct and reinsurance
companies for general insurance
 It is a statutory association recognized by the Government of Malaysia for all
registered insurers transacting general insurance business (28)
 PIAM’s corporate objectives are:
 Articulate one unified voice for and on behalf of the industry
 Create favourable business environment for member companies
 Promote image of the industry and its role in the economy
 Educate consumers on general insurance products
 Foster public confidence by protecting the interest of consumers
 Establish a sound and efficient insurance infrastructure with best practices
 Raise professionalism and ensure standards in distribution
 Harmonize approaches and solutions to industry issues
 Build a pipeline of talent and profile general insurance as a career of choice
 Facilitate information sharing within boundaries of Competition Act
11
LIFE INSURANCE ASSOCIATION OF MALAYSIA (LIIAM)

 LIAM is a trade association with a total of 16 members of which 14 are life

insurance companies and 2 life reinsurance companies
 All life and reinsurance life reinsurance companies must be members of
LIAM
LIAM’s objectives are
 To promote a progressive life insurance industry to enhance public
understanding and appreciation for life insurance
 To upgrade the image and professionalism of the life insurance industry

 To support the regulatory authorities in developing a strong industry

12
LIFE INSURANCE ASSOCIATION OF MALAYSIA (LIIAM)

 LIAM’s mission and vision are:

 To promote and establish a sound structure in Malaysia
 To promote public understanding and appreciation for life insurance
 To enhance the professionalism of staff and agents through
continuous training and education
 To formulate rules and regulations to instill good business practices

 To give support to regulatory authorities in developing a strong and

healthy industry
 To improve the image of the life insurance industry through self-
regulation

13
MALAYSIAN TAKAFUL ASSOCIATION (MTA)
 The objective of MTA is of promoting and representing the interests of its members
 The membership comprises of all 15 licensed Takaful and Re-Takaful operators in Malaysia
 Their objectives are:
 Promote and represent the interests of members and also to establish foundation of a

sound Takaful structure with the cooperation of industry’s stakeholders

 Represent the Malaysian Takaful industry to government, regulators and policy makers
locally and internationally in driving effective public policy and regulations
 Institute strategic alliances and cooperation with other similar associations; both locally and
internationally
 Advocates high standard services within the industry and make available relevant and
pertinent information to the public about takaful
 Promote the benefits of Takaful to the government, regulators, policy makers and the public

 Collect, collate and publish statistics and any other relevant information relating to Takaful
mambers

14
HOSPITAL AND SURGICAL GUIDELINES
 The HSI Underwriting Guide prepared by the Joint Technical Committee
on Medical and Health Insurance prepared by PIAM, LIAM and NIAM was
approved by BNM for industry on underwriting H&S business
 BNM in its revised guidelines has made reference to follow the HIS guide,
where applicable, specifically for H&S policies written by both life and
general insurers
 The HSI guide sets the minimum basic standards and controls, with
recommended underwriting guidance to ensure fair treatment of
policyholders and to reduce disputes through
 standardizing of definitions used in the hospitalization and surgical insurance
policies

15
HOSPITAL AND SURGICAL GUIDELINES
 The HSI underwriting guide is segregated into two sections, namely:
a) Mandatory compliance
b) Recommended guidelines
 The application of the mandatory guidelines is segregated into product
types, namely:
a) Individual policies
b) Group policies, under section 128 FSA 2013, Schedule 8 Part 3 sub-
section 2/section 140 Paragraph 11 of the IFSA 2013
c) Group policies under section 128 FSA 2013, Schedule 8 Part 3 Sub-
section2/section 140 Paragraph 11 of IFSA 2013
d) Group Policies

16
HOSPITAL AND SURGICAL GUIDELINES
 Mandatory compliance refers to the guidelines that must be complied with
strictly
 It is mandatory for all insurers to comply with the following guidelines:
a) Standardized glossary of terms and conditions
b) Specific guidelines applicable to the respective product types of policies
 In the guidelines, `recommended’ means that the insurer has an option to
follow or offer better terms, not less than the recommended terms
 It also provides a guide for any new medical underwriters, on how to
underwrite medical conditions ranging from various disabilities to acute
or chronic medical conditions

17
HOSPITAL AND SURGICAL GUIDELINES
 The HSI guide does not apply to the following classes of health
insurance:
 Hospitalization cash allowance
 Clinical insurance
 Dental insurance
 Critical illness insurance
 Other health insurances not deemed to be hospitalization and surgical insurance

 The HSI guide may be reviewed from time to time to address issues of
concern resulting from the changing socio-economic landscape, with
BNM’s approval

18
HOSPITAL AND SURGICAL GUIDELINES
OTHERS
 The other guidelines would the respective company’s internal guidelines
related to its marketing strategy and area of growth
 Sound product design and pricing strategies are fundamental to
achieving company’s objectives or profitability .
 Most insurers would have their internal product design and pricing policy
encompassing the following:
a) Objectives
 The objectives will be to ensure product design and pricing strategies will enable
the company to achieve its financial objectives
 The policy covers all types of insurance products offered by the company

19
HOSPITAL AND SURGICAL GUIDELINES
OTHERS
b) Policy
 Outlines the type of risks, risk appetite, and the products the company can offer
with the desired profit targets, along with the processes of assessment, follow-up
and reporting on the financial aspects of product design and pricing
 Company also has to comply with the regulatory guidelines in the product design
and pricing requirements
c) Approvals
 All product designs and pricing must be approved by the senior management or
approving authority of the company
 Under the local `launch-and-file’ system, the company will only file with BNM for
prior approval of new products or product enhancements that carry a material risk
profile, prior to launch
\
20
HOSPITAL AND SURGICAL GUIDELINES
OTHERS
d) Monitoring and Controls
 the existing products will be monitored and reviewed on an annual basis
 There will be annual planning process to determine the types of business that the
company anticipates to write in the short or long term
 Should any re-pricing of existing products be required, there would be a pricing
report to substantiate the action

21
BUYERS
 Buyers of PMI policies are segmented into three broad categories:
a) Private individuals, who buy policies for themselves or for their
family

b) Voluntary groups or members of groups, associations, clubs with

the purpose of buying a PMI policy as a group; and

c) Corporate or companies , who buy a PMI policy for their employee’s

benefit

22
THE INDIVIDUAL MARKET
 PMI products are more individually driven to meet the private health
cover needs of consumers at large.
 There is great potential for the individual market as the population of the
country increases
 An individual would buy PMI plan for financial protection for himself
and/or for the family members
 The reasons can be as /follows:-
 Quick access to private care in the event of illness
 Financial protection as being the sole bread earner is crucial
 Greater choice of options for treatment when in need
 In Malaysia, there is a tax relief of RM3,000 for individuals for the
purchase of Medical and education policies

23
THE VOLUNTARY GROUP MARKET
 Voluntary groups are generally members of a group coming together for
the purpose of buying PMI cover with a common purpose

1) Affinity Group
• This is a group of people who have an affinity such as membership of a particular
organization or a shared interest
• They can be club members or association members and they use the combined
buying power to negotiate for special coverage at a lower premium
• The marketing cost for a PMI insurer is lower with a greater number of sales and
the probability of the members buying is also favourable as recommended by the
group for the group benefits

24
THE VOLUNTARY GROUP MARKET
2) Other Voluntary Group
 This may include the agents or the distributors of big corporate clients who may
come together for a common scheme to purchase a PMI policy
 the policy can be specifically tailor-made for them at an agreed premium
consideration

3) Company Employee Plan

 There is where a company will arrange a plan for the employees
 Premiums is paid by the employees on a voluntary participation basis
 In all cases of the voluntary group market, the premium is paid by the members
themselves

25
CORPORATE/COMPANY GROUP MARKETS
 A group company scheme is a scheme for the employees and may range
from a few employees to a large group of employees

 The company may be a sole proprietorship, partnership, private limited

public listed or public limited

 The key element is that the coverage is taken up by the company as part
or its obligations and the benefits are paid directly to the employees

 The companies may pay all or part of the premium for their employees

26
CORPORATE/COMPANY GROUP MARKETS
1) Company – part employees paid
 This means that the company only pays for part of the premium and the employees
pay a part as well
 The company would pay for the bigger part of the share for the basic cover and the
employees may pay a small portion for the same extension of benefits
2) Company – employee pay for dependants only
 This means that the company pays or the employee coverage only,
 The employees will have to ;pay for their own spouses/children to be covered
3) Company – employer paid
 This means that the company will arrange for group cover for the employees
 Company pays for the coverage, including the dependents of the employees,
should be scheme be extended for dependents as well

27
MARKETING TECHNIQUES FOR PMI
 Insurers will use various marketing techniques, which they deem the best
fit to secure the market share

 The process starts with product development, which involves developing

the right product at the right price for the identified market segment

 Then it goes to marketing the proposition to the customer and

presentation and follow up of the proposition in sales closure

28
RIGHT PRODUCT AND PRICING
 Key marketing function is to develop the right product at the right price
 This can be done by identifying the market segment to which the
products will appeal
 The market segment can be categorized as follows:-
 By age – most individual products can be targeted at young working
adults while others may be targeted at the senior citizens
 By gender – some plans may cater for women, for example, specific
benefits as in cosmetic surgery benefits or maternity benefits
 Geographical - special plans may appeal to the buyers in a location
 By affinity group - special benefits can be identifies for target groups, for
example, to provide outpatient physiotherapy for members of a sports
club

29
RIGHT PRODUCT AND PRICING
 The market segment can be categorized as follows:-
 By family status - the benefits for singles will differ from those with
children
 By price range – the affordability of individuals differ and some may have
a limited budget, whereas others may prefer a premier plan

 To develop the right product insurers may also conduct surveys to check
the preference or feedback from intermediaries
 In the development of new products or for enhancing existing products
 However, insurers must comply with the BNM Guideline on Introduction
of New Products by Insurers and Takaful Operators and other related
guidelines

30
GETTING THE PRODUCT PR0POSITION TO THE CUSTOMER
 Insurer must determine how to distribute the product by identifying
distribution channel or `open to all’ in reaching out to the targeted
segment
 In some products, the distribution channel can be specific, eg
bancassurance products
 In other cases, it may be distributed by intermediaries, greater effort must
be made in the design of the product brochures so they can draw
attention of the customer for buying the product
 Mass communication is effective in getting across the message to the
general public on new product promotions
 Advertising agencies will advise on type if media to use and will monitor
the responses to the advertisement to maximize returns to the company

31
THE PR0POSITION AND ITS PRESENTATION
 The sales brochure must explicitly explain the product and have to follow
Guidelines on Product Transparency issued by BNM

 Must also comply with Guidelines on Medical and Health Insurance

Business (Revised)

 Insurers must be transparent in their marketing and sales material by

providing sufficient detail of the salient features of the product to enable
prospective customers to make informed decisions

32
THE PR0POSITION AND ITS PRESENTATION
 The marketing department will create a marketing sales kit for their
marketing staff for effective presentation, highlighting the following:
 The Product Coverage
 Unique features and other salient points
 The product terms

 The policy exclusions

 Claims procedures
 Third party administrator, if any, and other functions
 Mode of payment

 Renewal terms

33
FOLLOW UP
 Follow up is important to secure sales after a presentation

 The prospective customer may be uncertain and require a follow up to

assure them that the product best meets their needs and is the right
choice

 The policy will have to be issued and delivered speedily

 The policy pack includes not only the policy conditions but also
information on how to make a claim and list of panel hospitals, if using
the `medical card facility’

34
FOLLOW UP
 If there is an intermediary involved, the PMI sales process would consist
of the following stages:

 Prospecting
 This is to find potential new customers, which can be from referrals, personal
contacts, immediate family members, advertisement responses, direct mailing
responses , cold calling from the telephone directory or other mailing list
 Initial contact
 This is the setting up of a meeting to meet the customer to discuss their needs and
proposition of the plan
 At times, information of the company and the quotation of the specific product may
have been sent to the customer in advance of the meeting

35
FOLLOW UP
 Meeting
 Meeting with the customer to establish the rapport, to ascertain the customer’s
needs and to determine the best solution to meet the needs
 Information may be gathered and the intermediary will determine if there are other
needs or products to be recommended and meeting again for presentation
 If the solution offered is acceptable, the intermediary will get customer to fill up the
proposal form
 Follow up and servicing meeting
 If further presentation is required, a follow up meeting can be arranged
 Once sales is secured, a service meeting will be conducted to address any issues
that may arise during the course of the policy period, in terms of claims or renewal

36
DISTRIBUTION CHANNEL
 The distribution channels used in the sale of PMI products are:
a) Direct
b) Indirect

 Using the combination of both can balance the benefits and costs

 This will give opportunity to penetrate into various categories of

clientele to maximize sales and meet their objectives

37
DIRECT DISTRIBUTION CHANNELS
 In direct distribution channels, the insurer is in control of all marketing
activities and connecting with the customer directly
 Some of the main direct channels are:

Direct Sales Force

 This is the direct sales department that solicits business directly from the
market
 The sales personnel are the employees of the company engaged for the
sole responsibility of bringing the sales
 There will be sales targets and strategy set for the department

38
DIRECT DISTRIBUTION CHANNELS
Direct Sales Force
 The insurer will:
 Identify the target market through market segmentations (small medium sized
enterprises or large corporates

 Conduct extensive market research

 Design products and sales promotional material or sales kits for presentation

 The sales personnel will directly approach the customer in all aspects,
from marketing the product, to closing the sale and providing full service
throughout the period of cover
39
DIRECT SALES FORCE
 There are advantages and disadvantages of direct sales:
Advantages
a) The insurer is in control of the distribution channel
b) Customers enjoy the direct rebate as the insurers is able to rebate the
full commission/brokerage directly to the customer
c) The insurer can cross sell with other products as a website package

d) Differentiation of services, when competing with other providers

e) Expertise of sales personnel in the knowledge of the product as they
are only focusing on the company’s product;
f) Training can be effectively carried out to meet internal compliance
g) Control of business level whereby it can be expanded by recruiting
more staff
40
DIRECT SALES FORCE
Disadvantages
a) Lack of choice for customers; generally customers would want to
compare different quotes form different insurers;
b) The start-up cost of setting up a direct sales department may be high,
involving getting new employees who have the skills to secure new
business
c) Even with no sales, the staff have to be paid by the company
d) Ongoing infrastructure costs in overheads, administration and training

e) Conflict of interest in competing with the company’s agents/brokers for

the same customer; which in turn, may not have the support of the
agent/broker to continue with the company

41
ADVERTISING
 Refers to advertisements placed in newspapers and magazines also
known as `print media’
 This will capture reader’s attention, attract the reader to learn more
about a product
 This may induce a decision to purchase directly from the company
 Insurers can target specific groups of readers, even in different
vernacular platforms
 The other form of advertising in `broadcast media’ (radio, TV and
websites)
 It is for a short span due to cost of advertisement
 There will be a tool free line or email for customers to call/email
 There will be sales personnel assigned to answer response and covert
to sales 42
DIRECT MAIL
 Direct mail is sent directly to the customer

 The enclosed printed material consists of an introductory letter,

brochures, proposal forms and prepaid envelope for response

 The design of the literature in the direct mail is generally attractive with
an appeal for the customer to consider

 The mailing list of customers is selected based on the insurer’s criteria

so that the product can meet the customers’ needs

43
TELEMARKETING
 Telemarketing is the use of telephones to contact customers to explain
the product features and convince them to purchase the product
 The product is usually a simplified product which is easy to understand
and without much underwriting required
 Insurers usually engage the service of a call centre for such operations
as it requires well-trained staff with a positive disposition and good
knowledge of the product
 This will help them articulate the product features and the ability to close
sales within short spans of tele-conversation
 The product identified for tele-marketing strategy can be for special
target segments according to their needs or ability to purchase

44
INTERNET SALES
 This method is gaining popularity and will be the way forward for the
next generation of individual PMI sales

 Insurers are able to feature their products and offer a menu of

information from which the customer can choose

 Customers are able to search and compare products, download

proposal forms or fill the application online and submit for consideration

 With an electronic payment facility, it aids sales tremendously as the

sales can be easily concluded with the online applications and online
payment of the premium
45
WORKSITE MARKETING
 This is where the insurer directly markets the PMI product to the
employees of their corporate clients at their place of work
 This is on a voluntary basis as the premium is paid by the employees
themselves
 The plans offered may consist of a range of options according to the
employee’s affordability
 The marketing activities include:
 Contacting the employees directly by phone or email
 One-to-one meetings, usually in a booth at the company’s premises;
 Group presentations to the employees, at a meeting
 Workshop or special health talk or wellness program event

46
WORKSITE MARKETING
 The advantage is that there is no disruption to the employee’s time at
work and employees can have access to the information or explanation
in person by the insurer

 Insurers can reach out to many employees during the specific time
within the confines of the premises,

 This can help save time and transportation costs.

47
INDIRECT DISTRIBUTION CHANNELS
Agents
 Two types of groups of agents
 General Insurance agents; and
 Life insurance agents
 Agents act on behalf of insurance companies to solicit and negotiate
insurance business in line with the terms of appointment
 General insurance agents can represent 2 copies while life agents can
represent only 1 company
 To be an agent one must pass SPM and PCEIA (AB) for general and C
for life
 After passing they need to register with PIAM or LIAM and are subject to
GIARR

48
INDIRECT DISTRIBUTION CHANNELS
Brokers
 Brokers are full time professionals licensed by BNM and can represent
all insurance companies
 Paid up capital for brokers is RM500,000
 They must have insurance qualifications and experience

 They must have a Professional Indemnity insurance in place and be

members of MITBA
 Brokers represent their clients and can seek quotations from all
companies
 Brokers must provide professional advice and get the best quotes from
the market for their clients
 They earn brokerage or professional fees

49
INDIRECT DISTRIBUTION CHANNELS
Financial Advisers (Fas)
 FAs are approved under FSA and IFSA to carry out advisory business
 Must be a corporate body with a minimum paid up capital of RM100,000
 Must have PI cover of RM200,000 to protect consumers

 The representative of FA must be approved by BNM and must have

minimum professional qualification specified by BNM
 FAs are independent parties and must source the best coverage for
client taking into account financial objectives, financial situation and
personal needs of the customer
 Consumers can expect FAs to provide effective financial planning a
needs based approach rather than merely product driven sales

50
INDIRECT DISTRIBUTION CHANNELS
Bancassurance
 This is the selling of insurance through the banks
 It is a partnership relationship between a bank and the insurance
company
 The insurance products are sold to the bank’s client base by bank staff
and tellers, rather then an insurance agent
 Bank staff are supported by insurance company through sales training,
product information. Marketing campaigns as well as specialized
insurance advisers
 Advantage is banks can earn commission and insurance companies are
able to expand their customer base

51
PRODUCT MARKETING
 Product marketing in insurance is about sales and services
 The role of product marketing department is to manage the products
and achieve the maximization of sales
 A product marketing department functions generally cover the following:

Researching the needs of the consumers

 This can be through feedback from existing customers, intermediaries, from provides or
engaging a research company to conduct a survey on the company’s services and
reputation
 Such market research is classified into
a) Quantitative - involves counting responses to a particular question
b) Qualitative - more in depth survey of people’s views and requires speaking to
people individually (phone, in person or in focus groups). Focus groups are
expensive but allow a greater depth analysis without being intrusive

52
PRODUCT MARKETING
1) Analyzing sales
 Insurer must monitor the progress of the product in terms of growth and its
competitiveness in the market
 Products have a life span and with analysis, it will identify any problems or gaps in
cover that may require immediate action or rectification
 Rectification can be done by organizing sales campaigns to boost sales or in areas of
training of sales personnel

2) Competitive analysis
 Insurers must keep abreast of what competitors are offering in terms pf new product
innovation and terms of cover
 This is vital for new product development that are competitive as well as recognizing
the company’s strength and weakness in the product offering
 Commercial packages can be used to analyze competitor products in varying detail
from benefits to terms and pricing

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PRODUCT MARKETING
3) Pricing
 Pricing of products is the function of an actuarial department
 Marketing has a role in helping to ensure that the product pricing level set can optimize
sales and meet profit targets
 This is done by analyzing the competitors pricing, setting up pricing models and
negotiating with actuary on the balance between benefits and price
 Insurers will identify the market segment and be competitive in their pricing to appeal to
certain age groups or gender
 Insurers can also choose to maximize their market share in certain groups or in
particular in areas even though the profit margin may be low
 Example, large groups above 500 members, where a proactive insurer can block out
the rest of the competitors and gain market control as the leading insurer of choice
specializing in PMI business for that group

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PRODUCT MARKETING
4) Product Design
 Product design includes terms of benefits and features, pricing level, and promotional
materials

 There is no perfect product

 There will always be a tussle between maximizing sales or maximizing profits between
the marketing department and the finance department

 Optimal mix is to be able to maximize profitability and yet offer competitive products
while gaining market share

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PRODUCT MARKETING
5) Product Promotion
 Product promotion can take the following forms:
a) Advertisements - to the general public through newspapers, internet, magazines, TV
and radio
b) Product brochures - this is the sales aid, brochure design, application form and
information of the product
c) Launching of the product to the press - involves press briefings and press releases
to create an impact on the launching of the product to the general public to create
more interest
d) Launching of the product to the intermediaries – takes the form of a roadshows
addressing sales meetings with the key intermediaries. Motivation talks and sales
campaigns will be arranged to kick-start the product
e) Product training - training for all who sell the product to create awareness and be
equipped for the sales and support functions

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RELATIONSHIP BETWEEN INSURERS &
HEALTHCARE PROVIDERS
 Relationship between these insurer and provider is mutual as both rely on each other
to providing services to the Insured
 Insurer needs to know of the types and costs of services provided to adequately price
the products as well as for allowing the insured access to their panel hospitals
 Insurer would want the provider to:
 aware that even though the Insured has a PMI policy, the charges must be fair,
reasonable and customary
 ethical in their jurisdiction of care
 co-operate with the insurer in the event of claims;
 not likely to cause difficulties for the Insured
 able to influence potential customers positively for the need of getting cover

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RELATIONSHIP BETWEEN INSURERS &
HEALTHCARE PROVIDERS
 This is achieved by close liaison between the hospitals and the claim personnel of the
insurance company (including Chief Medical Officer) in creating mutual rapport

 With the `medical card facility’, the providers are assured of prompt settlement of their
bills and this increases the Insured’s confidence in seeking private healthcare facilities

 Providers should also take the initiative to get to know the insurer and the types of
coverage they offer

 Provider should provide best service to their mutual client (the Insured)

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ROLE PLAYED BY HEALTHCARE PROVIDERS
 Providers are hospitals, specialists and medical practitioners that provide healthcare
services to the people at large (with or without PMI policies)
 They are professionals ad are guided by their code of ethics to treat the patient in their
best practice
 In insurance, healthcare providers are expected to play an effective role by necessary
assistance to the Insured by:
 not delaying in providing assistance required in the filing of the claim form and
other relevant information, when necessary
 not frustrating the patient in interpreting the PMI policy with limited knowledge
 administrating fair and medically necessary treatment

 The role played by healthcare providers is vital for maintaining a good relationship
between insurers, providers and the insured or the patient

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MALAYSIAN INSURANCE MARKET
 Product marketing in Malaysia is governed by the related marketing guidelines
imposed by BNM and related associations

 There is greater financial capacity in the market, which encourages competition among
insurers

 The evolving landscape also changes the way insurance businesses are managed

 The right business strategy, product innovation and distribution channels will set the
market leaders apart

 There are good prospects of growth with an increasing populations, as well as greater
consumer awareness with proper product marketing techniques setting the pace

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OTHER MARKETS
 The health insurance market in other countries may differ significantly from the
Malaysian Market

 Where there is national healthcare scheme and established health practices, the
product marketing techniques will have to be adjusted to the local needs and the way
the business is transacted

 Product marketing techniques must be deployed to meet the changing consumer

needs in different market scenarios

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MARKET SIZE AND GROWTH
 Refer to pages 190 and 191 to compare the market size and growth

Market Strategy
 Insurer may pursue a certain market segment by developing products, which appeal to
that particular market
 Identifying the right market is crucial as if there are too many competitors, it may be
difficult to dislodge the them
 More intensive marketing activities and higher cost of sales may be required
 If the chosen segment is a group segment, there is still potential of growth especially if
the premium is paid by the employer as part of an employee benefit scheme
 The marketing strategy would then involve identifying the target group, geographical
area, occupation and so on
 Other factors that must be considered will be the growing population, increasing
medical inflation, the affluent society and the growth of the provider industry

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PRIVATE MEDICAL INSURANCE PROVIDERS
 The following are providers of medical insurance
 General Insurance companies
 Life Insurance Companies

 Takaful Operators

Types of Organizations That Inderwrite and Administer PMI

1) Commercial Insurers
a) Not applicable in Malaysia as there are no commercial insurers
b) There is commercial insurance underwritten by the general insurers in Malaysia
c) Commercial insurance is generally coverage for businesses to protect against
losses through unforeseen circumstances like property damage, theft, liability and
business interruption

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PRIVATE MEDICAL INSURANCE PROVIDERS
Life Insurers (10)
 They are regulated by BNM and provide life insurance business
 Life insurers can underwrite health insurance such as:
 a standalone individual policy
 a rider to a life policy
 a rider to an investment linked policy
 a group policy for corporate

General Insurers (19)

 Regulated by BNM for purpose of providing general insurance business
 Provides protection against losses and damages other than life elements
 General insurers can write heath insurance as
 a standalone individual policy
 a group policy for corporations

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PRIVATE MEDICAL INSURANCE PROVIDERS
Composite Insurers (4)

 Regulated by BNM for the purpose of life and general insurance business

 There are also permitted to underwrite heath insurance policies

 FSA 2013 prohibits insurers from operating both life and general insurance
simultaneously

 Composite companies will have to convert into a single insurance business and are
given a five year transition period to convert

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