Balachander Sekhar
The latest set of guidelines issued by Insurance Regulatory and Development Authority of India (IRDAI) to regulate Point of Sale (POS) for insurance sector will go a long way towards enhancing the penetration as well as density of insurance policies. These new set of guidelines are also hugely beneficial for the relatively new players as they will help them grow their business and reach out to those segments where buying an insurance policy is still considered to be a Herculean task.
The two-wheeler segment in auto insurance remains one of the most under penetrated section in the insurance industry. While sale of two-wheelers has grown at a steady pace over the last several years, the number of vehicles with lapsed insurance is also equally high after the first year.
After the one year insurance policy mandatorily provided at the time of purchase expires, people generally tend to forget about getting the policy renewed. Patchy availability of insurance options, lackadaisical enforcement, and insufficient push from insurers for this ‘low ticket’ segment are the key reasons for this large-scale under insurance in two wheelers.
The new POS guidelines allow intermediary players in the insurance sector such as brokers giving comparative insurance rates to appoint agents to work on their behalf. Under previous guidelines, only insurers could appoint dedicated agents for their business and one agent could sell policies only for one company. On the other hand, POS certified agents of brokers are allowed to solicit and sell retail insurance products for various insurance companies on the condition that they should already be pre-underwritten. This for example includes motor insurance, simple health insurance and travel insurance.
As per the latest guidelines, brokers with online comparison portals can now have agents working for them. What this primarily means is that apart from their primary platform that is – online sales, these intermediaries can now also have offline sales agents to push sales in under penetrated markets. All the benefits of the online platform such as lower rates, hassle free policy issuance, on the spot policy issuance etc can now be made available through a robust combination of physical agents and digital technology. This will lead to easier availability of auto insurance, say for example, in a petrol pump or a neighborhood store. Easier availability and sufficient push from insurers/intermediaries will also improve insurance renewal and policy issuance, especially in the two-wheeler segment.
In the latest move to promote further insurance penetration, IRDAI has also allowed insurance intermediaries such as brokers to sponsor the training and certification of POS agents. Auto insurance constitutes the second largest segment in the insurance industry after life insurance. The contribution of motor insurance to online insurance market in India is substantial at around 250 crores.
Allowing intermediaries to appoint POS persons to sell retail insurance will ensure greater adherence to insurance requirements as well as improve insurance density by making policy purchase extremely convenient and easily available. As the number of trained POS persons increases in the hinterland, this move will definitely emerge as a game changer for insurers and intermediaries, especially for two wheelers in auto insurance.
The writer is CEO, RenewBuy
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