Retail vs Group Insurance Products

Retail vs Group Insurance Products

You’ve decided to start distributing insurance to your customers and terms like retail insurance and group insurance keep popping up. What are these? Are all insurance products retail, in a sense, because everything’s ‘sold’ to customers? Well, yes and no. There are differences and this blog will help you understand them.

This paragraph contains the absolute basics of insurance. If you’re familiar with the basic terms like insurance, underwriting, premium, and sum insured, skip to the next paragraph.

An insurer or insurance company is an organization that analyses the risk of insuring a person or an asset against a particular amount. They’re the ones who hire the actuarial experts who calculate, among other things, the possibility of an event occurring and they do this based on multiple parameters. This process is called underwriting.

Retail Insurance Products

These are insurance policies that a customer buys directly from the insurer to cover for a certain eventuality. It’s as simple as that. Examples of these policies or products are car insurance or health insurance. You choose the amount that you want to get covered for, pay the corresponding premium and submit the required documents and wait for the insurer to send you your policy statement.

Group insurance products

This one’s slightly different in that these policies cover a particular group of people.  The most common example most of you will be aware of are the group medical insurance covers provided by companies to their employees. The company is the distributor of insurance here and the employees are the ones who are each being covered for a pre-decided amount. This type of group cover extends to other groups such as societies, trusts, and even non-profit organizations.

The Government of India’s oversight authority, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurers to distribute insurance to groups of people. The IRDAI mandate requires these groups to appoint a distributor among themselves and he/she can distribute insurance products or covers to their members. A group can be a formal group, also known as an employer-employee group where all the group members work for the same employer; or it can be an informal group, also known as a non-employer-employee group where the group members can be anyone related to the organization in some ways (for example customers of a company, members of society, etc.).

Next, we’ll highlight the important ways in which retail and group insurance products are different, so you can make an informed decision while choosing which one to offer to your customers.

More About Retail Insurance Products

  • A license from IRDAI is an absolute must if you want to sell retail insurance products in India. All aspects of these insurance products, including marketing and distribution, are tightly regulated.
    These products can be created for specific cohorts of members of an existing group and an appointed group administrator can distribute it to its members.
  • Retail insurance products are standard insurance policies that insurance companies offer via their website or agents.
    Group insurance products are customized products that are tailored for members of an existing group. The members get better coverage and competitive prices due to the reduced liability of the insurer as the overall risk is spread across all the group members.
  • Retail insurance products can be sold by licensed intermediaries in the open market.
    Group insurance products can be distributed only to that group’s existing customers/members/employees.
  • To sell a retail insurance product, insurers usually collect a lot of information from customers before deciding whether to issue a policy or not. This is done because nothing is known about a customer before receiving an application form; There’s no information at hand to make a decision about whether to grant a policy.
    Group insurance products are created based on customer demographics provided to the insurer. Therefore, at the time of distribution, minimal information is sought from the group member. 
  • Retail insurance products are sold by insurers or intermediaries with a clear focus on building their insurance distribution businesses.
    Group insurance products are distributed by any organization, association or club to its existing group of members, customers, or users.
Retail Insurance ProductsGroup Insurance Products
Who can sell?Insurers and/or Intermediaries licensed by IRDAI can sell these policiesGroup manager (of groups that have signed up) can enrol their members into group insurance plans
What products can be sold?All standard insurance products that insurance companies offer via their website,aggregators or agentsOnly customized products that are tailored for members of an existing group
Who can buy?Anyone can buy these in an open marketOnly group members can get enrolled in group policies
How much information is required?A lot of information in needed from a customer before a policy can be issuedMinimal information is sought from the customer because a general profile of group members is already known
Which one should you distribute?If your business has a large user-base, then you should look at adding all relevant retail insurance products to distributeIf your business targets groups of people, then choose these along with retail insurance products