PoS person is latest channel for selling life insurance

While one will be able to buy insurance quickly, it will only sell products with limited sum assured

A first-time insurance buyer looking to buy a simple product will soon be able to buy it from a point of sales (PoS) person. The sales process is likely to be faster since PoS are permitted to sell only simple, over-the-counter (OTC) products. The drawback of this channel is that it will not be permitted to sell complex insurance products like unitlinked insurance plans (Ulips) and deferred annuity plans. For such products, customers will have to approach agents or brokers.

According to the guidelines released by the Insurance Regulatory and Development Authority of India (Irdai), a PoS product means “a plain-vanilla type of product wherein each and every benefit is predefined and disclosed upfront clearly at the time of sale and is very simple to understand”. Products that can be sold through this channel include pure term insurance with or without return of premium, non-linked, non-participating endowment product, and immediate annuity products. A PoS can be appointed by either an insurance company or an intermediary like a broker or an agent.

“A PoS will be useful for someone who is buying insurance for the first time and is looking for a product that is easy to understand. While agents can sell any kind of life insurance product, PoS can sell only OTC kind of products. The objective is to improve insurance penetration in the interiors and in smaller towns, where you may not require fullfledged agents,’’ says Sujoy Manna, vice-president, products, HDFC Life Insurance.

For companies and intermediaries, it will be easier to appoint a PoS rather than an agent. “Since the qualifications and training required for a PoS are lower, the investment required by insurers and intermediaries in appointing a PoS will be lower, as compared to an agent,” says Mahavir Chopra, director, health, life and strategic initiatives, Coverfox.com, an online insurance broker. “Usually, it will be people whom customers access for a service that is aligned to the need of a specific insurance product. For instance, a travel agent can become a PoS and sell travel insurance policies at the point of sale of the travel ticket to his customers, a home loan agent can distribute home insurance or term life insurance while processing the home loan,” he adds.

All insurance agents, insurers and Irdai-licensed entities like brokers, aggregators, insurance marketing firms and corporate agents are eligible to set up PoS. While PoS will be expected to remain as the touch point of customers for claims and related services, the major tasks will be performed by the insurers. “This is due to the fact that a PoS is unlikely to be an organised channel but will rather be constituted by a heterogeneous network of people,” says Alok Bhatnagar, chief executive officer and co-founder, Easypolicy, an online insurance aggregator. “In the current scenario, most of the products being sold are complex in nature, which also leaves scope for misselling by insurance agents. With the new guidelines, selling of simpler life insurance products will be easier,” he adds. There is a restriction on the ticket size of the policies that a PoS can sell. It can sell term plans of only up to ~25 lakh and endowment plans of up to ~10 lakh, not including accidental death benefit in both cases.

“There is a restriction on the ticket size because these are OTC kind of products and the sale has to be done within a certain time limit,’’ says Manna. Customers can also expect the same level of aftersales service like claims assistance and renewal reminders. The only difference here is that the sales process has been simplified.