Life insurers are planning to approach the regulator to allow ‘point of sales’ persons, a new category of distributors, to sell simple products, such as term life insurance plans.

The move follows the Insurance Regulatory and Development Authority of India (IRDAI) allowing over-the-counter products in the general and health insurance space to be sold by point of sales (PoS) persons, who require lower training and technical knowledge.

In comparison to an insurance agent, PoS persons will not have to undergo rigorous training as they will be licensed to sell only standardised products.

The PoS persons will be recognised through their Aadhaar or PAN (permanent account number) cards, since these will be mentioned in all policies they sell. Also, to avoid mis-selling, the IRDAI has said that insurers or intermediaries hiring such persons will be liable for any misconduct by them.

Will reduce costs

The chief executive officer of a leading life insurer said that allowing PoS persons as the second tier distributor in the life insurance space will help increase insurance penetration by bringing in more distributors into the system and reducing the overall cost of distribution. “Term life insurance is the most straightforward form of protection, which does not require intensive training for selling.

“Currently, most agents are not interested in selling term life products as they carry lower commissions compared to bundled products like unit-linked insurance plans.”

Insurers say that hiring PoS persons will be less capital intensive as they can be engaged either by an insurer directly or intermediaries, such as insurance/corporate agents and insurance brokers. Further, lower eligibility criteria will allow more distributors to be hired. According to the regulator, those who have passed Class X can be appointed as PoS person.

Related Topics
comment COMMENT NOW