Insurance Market Segmentation:


In insurance industry, profiling is very important in determining premium rates. Typically, insurers collect every information available. However, analyzing thoroughly is not feasible since the number of variables is normally large.

The starting point is thus mass marketing. In mass marketing, the seller engages in the mass production, mass distribution and mass promotion of one product/ service for all buyers.

A niche on other hand is a more narrowly defined group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments.


Also, in terms of product complexity, insurance products can be categorized into low complexity and high complexity products.

Low complexity products:  These are simple products with a standard set of covered risks, perils and hazards.

High complexity products:  They have a large number of riders and warranties and do not indemnify certain causes of loss.


PRODUCT COMPLEXITY              LOW                  HIGH
Niche Market Fire Insurance (different risk profiles for each), Marine Insurance
  1. Weather Insurance
  2. Product Liability
Mass Market Householder’s     comprehensive Policy , Medical Insurance Personal Accident Insurance

Pension Products


The distribution strategy should vary according to the type of policy. Insurance products with low complexity can be sold through bank-assurance, but products with high complexity should not be sold through the same channels, as it would be very difficult  (in terms of time, effort and cost) to train bank employees in understanding the finer details of the complex policies.


Products with high complexity need a certain amount of customer hand holding in terms of explaining the terms, conditions, riders and warranties of the policy. In case of niche marketing, direct marketing can be used in the form of e-mails and direct calls through agents to specific customers belonging to the target segment. For high complexity niche products, spreading awareness and selling through financial advisors, consultants and brokers would also be a good strategy.


Niche Market
  • Direct marketing through personalized e-mails
  • Advertise in area specific journal with toll free numbers to set up appointments
  • Agents
  1. Well trained agents
  2. Financial advisors/consultants
  3. Brokers
Mass Market
  1. Bancassurance
  2. Postal department
  3. Agents
  1. Well trained agents
  2. Advertise in newspapers with toll free numbers to set up appointments








The following two tabs change content below.
We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]
1 Comment
  1. Can you tell us more about this? I’d care to find out some additional information.

Leave a reply is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp

Log in with your credentials


Forgot your details?


Create Account