Insurance Sales Cycle

Insurance sales cycle refer to the stages involved in selling an insurance product, from
identifying prospects to closing deals and retaining clients. These cycles can vary depending on
the type of insurance (e.g., life insurance, health insurance, commercial insurance) and the target
customer (individual or business). The key stages in an insurance sales cycle include:
1. Prospecting & Lead Generation
This involves identification of a potential customer who may need insurance cover based on their
needs. Prospecting is aimed at bringing new clients on board or procuring repeat purchases from
existing ones.
Strategies;
Cold calling: It is a sales technique of making phone calls to a targeted prospect, who has not
expressed interest in the business products.
Networking (in-person events, referrals, social circles)
Digital marketing (email campaigns, social media apps)
Existing policyholders for new products or a repeat purchase.
Cold canvassing: It involves visiting potential customers in person at their home or office for a
potential business. The visit is used to gauge the prospect’s interest and collect insights for a
customized proposal.
Personal observation: eg. Approach a car owner for car insurance.
Nesting: It is a systematic method of managing insurance-related risks and strategies that are
specific to a group of people in a network, event, stakeholders, and/ or using a specific
technology.
Newspapers/other publications. Eg. From published financial records or developing stories.
Partnerships with mortgage lenders. Inside information.

2. Qualifying the Lead

The goal is to evaluate if the lead is a good fit and ready to buy. This helps in the early
elimination of unviable prospects.
Can use the” BANT” approach:
Budget: Can they afford the cover?
Authority: Are they decision-makers?
Need: Do they require the product (life, health, auto, commercial, etc.)?
Timing: When are they likely to purchase?
The company should only pursue good prospects who have the following characteristics:
 Need to buy an insurance policy
 An ability to pay premiums
 Authority to purchase for group policy
 Eligibility to buy cover- insurable interest
 Accessibility or is approachable

3. Needs Analysis
This is aimed at understanding the prospect’s unique situation and identifying the right insurance
solution. It involves gathering information about the prospective customers particularly their
likes and dislikes, habits, financial status, behavior, and nature.
Strategies:
Ask questions about current cover if any, family/business needs, and goals. Can use both open-
ended and close-ended questionnaires.
Assess risks and gaps in their current cover.
Build trust by presenting tailored solutions based on the client’s financial needs and risk profile.

4. Proposal & Product Presentation

Present the most appropriate insurance product (s) to the prospect.
Explain the benefits, features, and premiums of specific policies.
Use visual tools or insurance calculators to clarify costs and benefits.
Let the policy stand out as a solution to their problem or need.

5. Handling Objections
This is aimed at addressing concerns and overcome resistance.
Common objections from prospects: "It’s too expensive." "I need to think about it." "I already
have insurance elsewhere."
Strategies:
Educate on value, return on investment, and risks of being uninsured.
Offer flexible payment options.
Compare the benefits of the proposed policy to their existing cover (s).

6. Closing the Sale

Finalize the agreement and complete paperwork.
Follow up consistently and encourage quick action.
Assist with paperwork and explain underwriting requirements.
Strategies:
Offer limited-time incentives.
Address final questions.

7. Post-Sale Follow-Up & Retention

Ensure customer satisfaction and foster long-term relationships.
Strategies:
Follow up after the policy purchase.
Provide regular policy reviews to keep coverage relevant.
Send reminders for renewals or additional coverage opportunities.
Benefits:
Increase customer loyalty.
Upsell or cross-sell additional insurance products.
Generate referrals.
Classification of Insurance
Classification is grouping things based on some common characteristics. In insurance, grouping
is done based on the type, scope of coverage, purpose, and type of insurance provider as outlined
below;

1. Based on Type of Coverage

Life Assurance
 Whole Life Insurance: Provides coverage for the policyholder's entire life. A guaranteed
payout is made to the heirs on the policyholder’s death.
 Term Life Insurance: Offers coverage for a specific period or "term." If the policyholder
dies during this period, a death benefit is paid to the beneficiaries.
 Endowment Plans: Includes savings and investment components along with life coverage.
Pays out a lump sum either on death or at the end of a specified term, whichever comes first.
General (Non-Life) Insurance
 Health Insurance
Covers medical expenses due to illness, accidents, or hospitalization.
Includes critical illness insurance, maternity benefits, and outpatient treatments.
 Motor Insurance
Covers vehicles against damage, theft, and third-party liabilities.
Types:
Third-Party Liability Insurance: Mandatory, covers damages caused to others.
Comprehensive Insurance: Covers own vehicle damage and third-party liabilities.
 Property Insurance
Protects homes, offices, and commercial properties from risks like fire, theft, natural
disasters, and vandalism.
Types:
Home Insurance: For residential properties and belongings.
Fire Insurance: Specifically for fire-related damages.
Earthquake Insurance: For damage caused by seismic activity.
 Travel Insurance
Covers risks during domestic or international travel, such as:
Flight delays or cancellations.
Lost baggage or passports.
Medical emergencies while traveling.
 Marine Insurance
Protects goods in transit via sea, air, or land from risks like theft, loss, or damage.
Types:
Cargo Insurance: Covers goods being transported.
Hull Insurance: For vessels and ships.
Freight Insurance: Covers freight losses.
 Liability Insurance
Protects against legal liabilities arising from injuries, property damage, or negligence.
Types:
Public Liability Insurance: For businesses against third-party claims.
Employer’s Liability Insurance: Covers employees' workplace injuries.
 Professional Indemnity Insurance: For professionals like doctors or lawyers against claims of
negligence.
 Personal Accident Insurance
Provides coverage for accidental injuries, disabilities, or death.
 Crop Insurance
Covers farmers against losses due to crop failure from natural calamities, pests, or diseases.
 Commercial Insurance
Tailored for businesses to protect against risks like: equipment breakdown, business
interruptions, theft, or fraud.
 Credit Insurance
Covers businesses against non-payment of debts or loan defaults.
2. Based on Purpose
 Commercial Insurance: Designed for businesses to manage risks related to operations,
employees, property, and liabilities.
 Personal Insurance: Designed to protect individuals and families. Examples: Life insurance,
health insurance, home insurance.
3. Based on the Provider
 Government Insurance: Often mandatory or subsidized, such as the National Social
Security Fund (NSSF), Housing Levy, Social Health Authority (SHA), and pension and
annuities.
 Private Insurance: Offered by private companies as tailored plans for individuals or
businesses.
4. Based on the Number of Insured
 Individual Insurance: Covers a single person or asset.
 Group Insurance: Provides coverage to a group of people under a single policy, usually
employees under an organization. The common group covers include:
 Group health insurance:
Covers medical expenses for members and sometimes their dependents.
May include benefits like outpatient care, hospitalization, and preventive care.
 Group life insurance:
Provides a lump sum payment to beneficiaries in the event of a member's death.
Often provided as a basic benefit with options for members to increase their coverage.
 Group Pension or Retirement Plans:
Offers retirement benefits, often contributory which are funded by both the employer and
employee contributions.
5. Other Classifications
 Microinsurance: Designed to provide affordable coverage to low-income individuals or
groups who are often excluded from traditional insurance markets. It is tailored to meet the
needs of people with limited income and assets, offering protection against risks like illness,
accidental death, property damage, crop failure, or natural disasters. They are mainly
provided by community-based organizations and non-governmental organizations and are
aimed at achieving financial inclusion for marginalized societies.
 Reinsurance: It is a financial arrangement in which an insurance company referred to as the
"ceding company" or "primary insurer" transfers some or all of the risks it has underwritten
to another insurance company, known as the reinsurer. The purpose of reinsurance is to
reduce the risk of large financial losses that the ceding company might incur from significant
claims, and it helps them stabilize their operations, protect their solvency, and manage capital
more efficiently. Simply referred to as insurance for insurance companies.
Process of Making an Insurance Claim

The process of making an insurance claim in Kenya is the same for all types of insurance,
whether it’s for health, motor, property, or any other type of insurance and typically involves
some steps as shown below:
1. Reporting of the incidence.
The incident is reported to the insurance company as soon as possible. Delays in reporting could
affect the validity of the claim. Many insurers have a set time frame (e.g., within 24 to 48 hours)
for reporting incidents. For motor insurance, the incident should be reported to the police within
24 hours and to obtain a police abstract, which is a crucial document for motor claims.
2. Gathering of the required documents to support the claim
These typically include:
 Completed claim form (provided by your insurer).
 Police report or abstract (for motor accidents or theft cases).
 Medical reports and bills (for health insurance).
 Repair estimates (for property or motor vehicle damage).
 Proof of ownership and valuation reports (for property insurance).
3. Filling and submission of the claim form
The claimant is required to fill in the claim form with accurate details about the incident.
Double-checking is necessary to ensure the information matches the supporting documents and
reports. Some insurers may allow online submissions for convenience. It can also be submitted
through email, or in person at the insurance company’s offices.
4. Assessment by the Insurer
The insurance company will assess the claim, which involves sending a loss adjuster or assessor
to evaluate the damage or situation. “Loss adjuster” and “loss assessor” are people who do the
business of assessing, investigating, negotiating, and verification of losses on behalf of the
insurer or the insured. For health insurance, insurers may liaise directly with hospitals or
healthcare providers for verification.
5. Approval or Rejection of the Claim
If the claim meets the insurance policy's terms and conditions, it will be approved. If there are
discrepancies or the claim doesn’t meet the policy requirements, it may be rejected or sent back
for more information.
6. Payment or Compensation
Once the claim is approved, the insurance company will process the payment or authorize
repairs/replacements. Payment can be made to the policyholder or directly to service providers,
such as garages or hospitals, depending on the arrangement. The timeline for receiving
compensation varies but is often specified in the insurance policy.