Insurers to line up products to be sold by point of sale persons

Pre-underwritten products approved by the country's insurance regulator will soon start hitting the market as companies have started designing specialised policies to be sold by Point of Sales Persons (POSPs).

Insurance Regulatory Development Authority of India (IRDAI) has said that POSPs will need to have passed Class 10 at least and will have to undergo an in-house training of 15 hours conducted by the insurance company and later pass an examination after the training is completed.

Vighnesh Shahane, Chief Executive Officer at IDBI Federal Life Insurance, said that their team is working on bringing out products for this segment, adding it could help widen their reach to customers.

As per the IRDAI guidelines, life insurers can sell pure term insurance products, immediate annuity products and non-linked non-participating endowment products through the POSPs.

In the general insurance sector, IRDAI has said that POSPs can sell policies such third party motor insurance, personal accident policy, cattle insurance, home insurance policy as well as travel insurance policy. The regulator has clarified that POS products would have to be plain vanilla products that are easy to understand and simple to sell.

“The general insurance industry will now look at selling motor insurance policies through the POSP, if we have adequate numbers,” said the head of underwriting at a mid-size non-life insurer.

Apart from the regular policies, IRDAI has allowed POSPs to sell crop insurance (government insurance schemes such as Pradhan Mantri Fasal Bima Yojana), Weather Based Crop Insurance Scheme (WBCIS) and Pradhan Mantri Jeevan Suraksha Bima Yojana.

The new guidelines have come into effect from this financial year. Cmpanies are now involved in designing and filing products for this distribution channel. Insurers have also been asked to file half-yearly returns for the POS products.

IRDAI has also defined the features of the products and the sum assured allowed under the schemes. For instance, the regulator has said that in case of a pure term product, the maximum sum assured that permissible to be sold be POSPs would be Rs 25 lakh. Further, the insurers will not be allowed to provide a return of premium feature for them.