PoSP-led premium collections to rise four-fold to Rs 60,000 crore: HSBC

Insurance premiums sourced through the Point of Sales Person (PoSP) distribution model are expected to see a four-fold increase over the next five years to ₹60,000 crore, according to HSBC Global Investment Research.

The insurers mobilised  $1.5 billion of premiums in FY25 through the PoSP distribution model in FY25. “We estimate this will grow at a CAGR of 35% to $6.5billion by FY30,” the global brokerage said.

In 2015, Irdai introduced the PoSP model to boost insurance penetration, with minimal qualification and training requirements for agents. PoSP agents can sell basic products such as motor insurance and small-ticket health and life covers, but not the full suite of insurance products.

The new distribution channel already contributed over 10% of total motor insurance premium collections in FY25, while penetration in retail health insurance is at 3–4% of ₹3.11 lakh crore of health insurance premiums. “By FY30, they (PoSPs) would be contributing to 20% market share in motor insurance and 12% market share in retail health insurance,” the report said.

Insurance brokers such as PB Fintech, Turtlemint, InsuranceDekho, and RenewBuy are harnessing the real benefits of PoSP distribution over the non-life insurers. “This is because a broker can sell products of multiple insurers, innovative products and more strategic distribution focus,” it said. Online insurance aggregator PB Fintech entered PoSP distribution in 2021 through PB Partners and has quickly captured 40% share, while IPO-bound Turtlemint, which was the early mover in 2016, holds 20% share.

The report, however, noted that high payouts, sticky costs, and product limitations make PoSP a loss-making distribution model for most brokers, given the upfront investments in technology and agent onboarding. “The current scale of the PoSP distribution model is driven by high growth in agent onboarding,” it said. PB Fintech and Turtlemint together have over 400,000 agents.

Agent retention and productivity are crucial to this model for customer retention and renewals. PB Fintech’s scored well in the PoSP agent retention with 76% retention rate against Turtlemint’s 65%. “The agent activation rate for the industry is low at 30-35% and on an average these agents start earning Rs 5,000-8,000/month in their 3rd year of becoming PoSP agent,” the report said.

A tech-enabled platform needs to reach the scale of ₹10,000 crore in premium collections to absorb fixed costs and break even. Of total PoSP costs, 50–60% are variable, while the balance 40–50% are fixed costs, including spending on relationship managers to manage agents, brand costs, technology platform.

The report also said competition intensity needs to moderate for brokers to reduce commission payouts and improve margins. Currently, 80–90% of revenue earned through commissions by brokers managing PoSP distribution is paid to those agents. “If the payout ratio is reduced to 70%, then the profit margins could reach high teens based on our sensitivity analysis,” the report said.