There is some good news for insurance intermediaries. IRDAI has allowed Point of Sales Persons (PoSPs) who are appointed by agents and insurers to distribute life insurance policies.
So far, PoSPs are allowed to distribute plain vanilla non-life products having standardized features. These products are typically pre-underwritten, 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.
With the new guidelines, PoSPs can now distribute life insurance products which are easy to understand, with features and pre-defined benefits stated upfront clearly. To start with, the insurance regulator has allowed these representative to sell pure term insurance with sum assured of up to Rs.25 lakh, endowment products with sum assured of up to Rs.10 lakh and immediate annuity products.
However, every policy sold through the PoSPs will have a “POSP-LI” in its nomenclature.
IRDAI norms allow insurance companies and insurance intermediaries like agents, brokers and insurance marketing firms to appoint their sales representatives across the country to solicit insurance policies.
According to the guidelines, agents can appoint a matriculate 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 have to bear expenses incurred on this exercise.
Though the guidelines don’t offer any clarity on the remuneration for such representatives, T.S. Vijayan, IRDAI Chairman had told Cafemutual on the sidelines of a recent 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.
In August, Cafemutual had reported that the insurance regulator is looking to allowing point of sales representatives to sell life insurance products along with health, crop and other non-life products.
