IRDAI has expanded the product basket offered by point of sales persons (PoSPs). Now, agents and insurers appointed insurance sales representatives can distribute health insurance, critical illness and crop insurance policies along with plain vanilla non-life policies.
So far, these sales representatives were allowed to sell 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 and other policies notified by IRDAI. Pre-underwritten policies are like social security schemes having pre-defined coverage, risks and premium.
Now, these sales representatives can distribute health insurance policies with a coverage of up to Rs. 1 lakh and critical illness cover of up to Rs. 3 lakh. Similarly, they can sell crop insurance policies with sum insured limit of Rs. 1 lakh per acre for all kinds of crops.
In a circular, IRDAI has said, “There are requests made to the authority by some of the insurers and insurance brokers to expand the range of products to include crop insurance and health insurance as they are largely pre-underwritten and are standard products. After examining the requests, it is decided to include additional products.”
Last year, 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 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.
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 told Cafemutual on the sidelines of an event 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.