In the dynamic insurance sector, a new participant has emerged as a change agent: point-of-sale persons (PoSPs). These people are changing the conventional agency paradigm, opening up the potential to extend insurance coverage into semi-urban and rural areas. In simple terms, a POSP is an insurance agent who is licensed to sell insurance products. This piece will help you provide a step-by-step guide to becoming a POSP.
"Unlike typical insurance agents, who are tied to a single company, PoSPs work in conjunction with insurance companies or corporate agents, broadening their coverage across many insurance markets such as health, life, and auto insurance. What distinguishes them is the flexibility they provide. PoSPs may smoothly merge their position with current professions, enterprises, or even academic endeavours, making it an accessible option for everyone, from housewives to college students," said Rakesh Goyal, Director of Probus Insurance Broker.
Why there is a need for PoSPs: Mis-selling is one of the most critical issues confronting the insurance industry today. Individual distributors or corporate agents, such as banks, are primarily concerned with promoting and selling their particular firms' products (insurance companies).
This significantly undermines investor and policyholder trust. They are the products of a single insurance company, which may represent a substantial weakness in the whole financial portfolio.
“In general, PoSPs gain from working with insurance brokerage channels. While broker-sponsored POSPs may give investors several options, they may also provide products from many insurers, enabling investors to choose the best plan depending on their risk profile, alternatively.” Goyal said that brokers also provide all of the back-end services that may be used to draw new investors into the insurance market.
How to become a PoSP: The Insurance Regulatory and Development Authority of India (IRDAI) recognised the pivotal role of PoSPs in enhancing insurance penetration and density.
The first step to becoming a successful POSP is to understand the requirements. To become a POSP, you are required to be at least 18 years old with a minimum educational qualification of high school or equivalent. Having a background in finance or sales can be advantageous but is unnecessary. “Establishing guidelines in 2016, IRDAI mandated PoSPs to be at least 18 years old with a minimum qualification of tenth grade, ensuring they can comprehend and sell policies effectively,” said Goyal.
The second step is to select a mentor Insurance company or insurance broker firm. Apply to these organisations that provide POSP opportunities. Once selected, the company will guide you through the entire process.
The third step is to undergo training. As a POSP, you must be well-versed in the various insurance products, regulations and sales techniques.
Goyal said, “Life insurance PoSPs need to undergo online training facilitated by the National Institute of Electronics and Information Technology (NIELIT), serving as the Training and Examining Body for PoSPs.”
The process begins with registration with an insurance company or intermediary, followed by a 15-hour training session. Once certified, PoSPs are empowered to sell insurance products, contributing to their earnings through commissions on each policy sold.
The fourth step is to pass the certification exam. After you have received training, you will have to clear the examination conducted by the IRDAI. The exam covers topics like types of insurance, regulatory laws, sales techniques and ethics.
The fifth and final step is to get licensed. Once you have passed the exam, you can apply for the POSP license. This license allows you to sell insurance products.
Goyal said, “The beauty of the PoSP model lies in its flexibility and potential for financial growth. With no upper limit on earnings, PoSPs can reap the rewards of their efforts by earning commissions on every policy they sell. When facilitated through intermediaries, this model offers a unique commission structure that can be advantageous for PoSPs, encouraging their active participation in the insurance ecosystem.”