IRDAI has announced examination and training program for appointing of Point of Sales Person (PoSP). This means, insurance companies and insurance intermediaries like agents, brokers and insurance marketing firms can now appoint their sales representatives across the country to solicit insurance policies.
In a press release, IRDAI has said, “To facilitate the growth of insurance business in the country thereby increasing the insurance penetration and insurance density, IRDAI has notified guidelines on Point of Sales Person – Non-Life & Health Insurance. One of the requirements for an individual to become a PoSP is to appear for training and passing examination conducted by National Institute of Electronics and Information Technology (NIELIT). The training and examination will be conducted online by NIELIT by charging Rs.500 inclusive of taxes.”
Earlier in October, IRDAI had come out with guidelines on appointment of PoSPs. According to the guidelines, agents can appoint a matriculation passed person as their sales representative to solicit insurance policies anywhere in India. However, such PoSPs should have at least Aadhaar card or PAN card as a proof of identity. PoSPs are required to complete online training and pass an examination. Insurance companies or agents will have to bear expenses incurred on this exercise.
To start with, PoSPs can distribute plain vanilla non-life products having standardized features. These products will have pre-underwritten coverage covering segments like motor insurance - both comprehensive and third party, personal accident policy, travel insurance, home insurance, health insurance and other policies notified by IRDAI. Pre-underwritten policies are like social security schemes having pre-defined coverage, risks and premium.
Recently, in a public forum, IRDAI Chairman T. S. Vijayan said that the insurance regulator is planning to introduce over-the-counter (OTC) insurance policies having standardized features. Vijayan said, “Just like savings bank accounts which are easy to understand, we are working with insurers to introduce simple products with standard features that would be distributed over-the-counter. These products will have pre-defined benefits such as Pradhan Mantri Bima Yojana and Pradhan Mantri Suraksha Yojana.” Going forward, IRDAI may allow PoSPs to sell such over-the-counter products.
In order to curb mis-selling under this new distribution channel, policies sold through PoSPs will come with identification number captured through Aadhaar or PAN. However, insurers or insurance agents will be liable for any misconduct of their sales representatives and can be penalized.
Though the guidelines don’t give any clarity on the remuneration for such representatives, T.S. Vijayan, IRDAI Chairman on the sidelines of an event told Cafemutual that the board of trustees of insurance companies will have to take a call on fixing the remuneration of PoSPs.
Experts say that this new distribution channel could be a cost effective way to grow business. It can help agents expand their distribution footprint across the country, thereby helping increase the insurance penetration in India.
