Point-of-sale persons may lower insurers' cost

IRDAI has said PSP can sell motor, personal accident, travel and home insurance policies

Point of Sales Person (PSP) selling motor insurance policies will reduce distribution costs in the general insurance space with more number of sales persons engaging with the customers across the country.

The insurance regulator has allowed matriculates to market simple and pre-underwritten policies for motor, personal accident, travel and home insurance.

To facilitate the growth of insurance business in the country thereby increasing the insurance penetration and insurance density, the regulator brought in new gudielines on PSP for non-life and health insurers.

These guidelines will enable individuals who are atleast 10th pass to solicit and market simple and pre-underwritten, as specified in the guidelines.

One of the requirements for an individual to become a PSP is to appear for training and passing examination conducted by National Institute of Electronics and Information Technology (NIELIT).

Either an insurance company or an insurance intermediary can engage a PSP to represent them. However, if there is any misconduct by PSP, the insurer will be held liable. Here, every PSP will be identified by their Aadhaar Card number of their PAN card number.

While details on their remuneration of PSP is not known, sector officials said that they will be able to significantly bring down distribution costs. A senior general insurance executive said that if the remuneration costs are fixed, then it will be more attractive for individuals to become a PSP, thereby helping them reach rural and semi-urban areas.

The regulator has said that a PSP can sell motor comprehensive package policy for two-wheeler, private car and commercial vehicles. They can also sell third party liability policy policy for two wheelers, private cars and commercial vehicles. Apart from this, they can also sell personal accident, travel policy and home insurance policy.

"In segments like home insurance there are bank tie-ups for loans where some commissions are charged. If PSP comes to distribute such products, it will be easier to reach people and also lower costs for companies," said the head of distribution at a private life insurance company.

Further, in areas like travel insurance where penetration is very low, companies are looking at the opportunity to sell via PSP in smaller towns. Such a PSP could be anyone, from a shop-owner, tailor, panchayat leader or teacher in the school, provided they pass the examination and training module.