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Last year, to increase the distribution footprint of the non-life insurance industry, the Insurance Regulatory and Development Authority of India (Irdai) allowed the appointment of point of sale persons (PoSPs). These are distributors who are allowed to sell simple non-life and health insurance products that don't require a lot of underwriting. On 9 November, the regulator decided to allow PoSPs to sell life insurance (LI) products as well, and accordingly they will be called the PoSP-LI. These life insurance products will have to be simple products. So, who are these PoSPs and who will hire them? Let's find out.
Who is a PoSP?
PoSPs can be engaged either directly by insurers or by intermediaries such as corporate agents and insurance brokers. The minimum educational qualification of such persons is Class 10 and they should be 18 years of age at least. The training and certification of PoSPs will be sponsored by either the insurer or the intermediary, which is planning to hire her. The examination for the certificate will be conducted by National Institute of Electronics and Information Technology (NIEIT). These persons will be identified by their Aadhaar card or Permanent Account Number (PAN) card, and the same will be mentioned in all the policies sold by them.
What can they sell?
PoSPs in the life insurance space can sell policies specifically demarcated for them. These are policies where the benefits are simple to understand, are stated upfront clearly and are fixed and pre-defined. Accordingly, Irdai has identified pure term insurance plans with or without return of premium, non-linked (non-participating) endowment plans that state the investment benefits upfront and immediate annuity as products that can be sold by the PoSPs.
Currently, insurance agents or specified representatives of corporate agents or insurance brokers, and insurance sales persons of insurance marketing firms are authorised to solicit and market insurance policies. The training and certification of these persons is far more rigorous compared to that of PoSPs, as they will be entrusted to sell only basic products.
Who is responsible?
The guidelines state that insurers or intermediaries hiring the PoSPs will be liable for their conduct.
For any misconduct by the PoSPs, the insurer or the intermediary will be penalised. Irdai has acted on the demands of the industry to simplify the distribution network but one concern around this is that increasing the distribution footprint by allowing more types of intermediaries could make monitoring difficult.
In arrangement with HT Syndication | MINT
This article was originally published on November 25, 2016.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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