The insurance industry in India has seen rapid growth in the last few years. To further increase insurance penetration in the country, the Insurance Regulatory and Development Authority of India (IRDAI) introduced a new distribution model in 2015. This model gave rise to Point of Sale Persons (PoSPs) as a new category of insurance distributors.
So what exactly is point of sales in insurance and how is it different from the traditional agency model? This comprehensive guide will explain everything you need to know about PoSPs.
What is Point of Sale in Insurance?
Point of sale refers to the time and place where a retail transaction is completed. In insurance, point of sale person (PoSP) refers to an individual certified by IRDAI to sell select insurance products to prospective customers at the point of sale.
PoSPs can sell insurance policies across channels where the transaction takes place. This includes:
- Physical retail stores
- Online e-commerce platforms
- Banks and NBFC partners
- Hospital desks
- Airport counters
- Railway ticket counters
- Petrol pumps
- Mobile shops
- Any other direct customer touchpoints
The aim is to make simple insurance products easily available to customers at places where they are most likely to need them.
Who is a Point of Sale Person (PoSP)?
A point of sale person (PoSP) is an individual certified by IRDAI to solicit, sell, and service select insurance products that require minimal explanation to potential customers.
As per IRDAI regulations, the minimum eligibility criteria to become a PoSP are:
- Should have passed 10th standard exam
- Completed required certification and training from IRDAI
- Should be at least 18 years of age
- Must not have been convicted for any criminal offence
The training involves a 15-hour course after which PoSPs have to pass an exam conducted by insurance companies. The entire process is quite fast and simple compared to the more rigorous training required for traditional agents.
What Products Can a PoSP Sell?
IRDAI has approved certain non-life and stand-alone health insurance products to be sold by PoSPs. Some examples include:
- Motor insurance for two-wheelers and private cars
- Personal accident policies
- Home insurance products
- Travel insurance
- Mobile insurance
- Crop insurance
- Other standardized and pre-underwritten policies approved by IRDAI
- Arogya Sanjeevani policy – A standard indemnity health plan
- Corona Kavach policy – COVID-19 specific plan
- Personal accident policies
Essentially, PoSPs can only sell regular, commonly understood insurance plans. They cannot sell complex products that require detailed needs analysis and advice.
PoSP Model Benefits and Advantages
The PoSP model offers various benefits for insurance companies as well as customers:
For Insurance Companies
- Wider reach and increased distribution footprint
- Simplified distribution process
- Low infrastructure and compliance requirements
- Flexible commission structure for PoSPs
- Easier availability of basic insurance policies
- Wider access through varied distribution channels
- Simpler purchase process for straightforward products
- Potential for lower distribution costs resulting in cheaper products
By opening up the sale of standard insurance covers to this wider network, IRDAI aims to increase insurance penetration across India.
Difference Between PoSP and Insurance Agents
While PoSPs act as simplified insurance distributors, there are some key differences compared to traditional insurance agents:
|Can only sell approved pre-underwritten simple covers
|Can sell all products including tailored and comprehensive covers
|Exam conducted by
|Validity of certification
|Lifetime or until surrendered
|For basic covers
|For all insurance needs
So while PoSPs serve a specific purpose, full-fledged agents are still required for providing customized solutions and advice to clients.
How Does PoSP Earn Commission?
PoSPs can earn commission from insurance companies on the policies they are able to sell to customers. The commission percentage and structure varies across products.
Some indicative commission rates are:
- Motor Insurance: Around 15% of premium
- Health Insurance: Around 15% of premium
- Personal Accident: Around 20% of premium
PoSPs need to achieve monthly targets set by insurance companies. The commissions get credited to their account on target achievement. The earnings potential is based on the number of policies sold.
Advantages of Becoming an Insurance PoSP
Pursuing a career as an insurance PoSP has many attractive benefits:
- Low barriers to entry: Minimal eligibility criteria and training required
- Earn as you work: Unlimited earning potential based on sales
- Flexibility: Can work full-time or part-time as per own schedule
- Wide reach: Can sell policies across multiple platforms and channels
- In-demand skill: Insurance distribution is a growing field with lots of opportunities
- Self-development: Gain sales, communication and relationship-building skills
- Societal impact: Help secure lives of millions by facilitating insurance access
For those looking for self-employment or side income, becoming an insurance PoSP offers a great way to enter this fast-growing segment.
How to Become an Insurance PoSP?
If you are interested in becoming an insurance PoSP, here is an overview of the steps involved:
Step 1) Check your eligibility as per the criteria set by IRDAI in terms of age, qualifications, financial track record etc.
Step 2) Select an insurance company you wish to partner with as a PoSP. Submit relevant application forms and documentation.
Step 3) Undergo the mandatory PoSP certification training conducted online and via classroom sessions based on IRDAI’s curriculum.
Step 4) Appear for the PoSP certification examination and qualify. These are usually MCQ based and held online.
Step 5) On successful completion, you will be issued a PoSP certification number/ID card by the insurance company.
Step 6) You can now start selling approved insurance products by interfacing with customers across various platforms.
The process from registration to being active as a certified PoSP usually takes 4 to 6 weeks. Take the first step to an rewarding insurance distribution career today!
Point of sales has opened up new avenues for insurance distribution in India. For consumers, it eases access to basic covers at the point of need. For individuals, it presents an opportunity to be self-employed PoSPs with attractive earning scope.
As per industry estimates, there are close to 50,000 active PoSPs in India currently. This number is slated to grow at 25% Year-on-Year as more players enter insurance distribution through this channel.
By simplifying norms and reach, the PoSP model will go a long way in democratizing insurance access for the masses. It is a win-win for providers, distributors and consumers alike.
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