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Financial prospects of (in)direct sales channel selection - The case of a subscription-based business model in the insurance sector

  • The sale of insurance policies through the payment of commissions to intermediaries, such as agents, is a common practice in the insurance sector. As a consequence of this compensation method, intermediaries must weigh-off between increasing their commission-based income and offering clients suitable low-priced policies. A novel business model seeks to address this issue by substituting this commission-fee-based approach with a subscription-based approach. Although a company already applies this business model with a minor customer base, there is a lack of information about whether and under which circumstances it can be financially profitable. To obtain transparency about the financial prospects of this business model, a corporate financial model was created, through which seven scenarios were modeled and financial key figures compared. Three scenarios simulate distribution via a direct sales channel through the company workforce, and four scenarios via an indirect sales channel consisting of external intermediaries. The comparison of the scenarios indicates that this commission- free business model can be profitable in the long term regardless of the sales channel selection. Yet the results show that distribution via the indirect channel can be perceived as more profitable. By optimizing processes in both channels and by adjusting the remuneration for intermediaries in the indirect channel, the financial prospects for all scenarios can be further increased.

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Author:Philipp Längle
Advisor:Kai-Markus Müller
Document Type:Bachelor Thesis
Year of Completion:2022
Granting Institution:Hochschule Furtwangen
Date of final exam:2022/02/28
Release Date:2022/05/19
Tag:Corporate financial model; Direct channel; Financial scenario modeling; Indirect channel; Insurance sector
Page Number:93
Degree Program:BMP - Business Management and Psychology
Functional area:Business Strategy
Open-Access-Status: Closed Access 
Licence (German):License LogoUrheberrechtlich geschützt