By Susheel Tejuja

The insurance landscape in India has witnessed significant transformation in the last two decades, driven by government initiatives and increased awareness. A pivotal move in this evolution was the introduction of the Point of Sales Person (PoSP) model by the Insurance Regulatory and Development Authority of India (IRDAI) in 2015. The PoSP model framework is democratising insurance accessibility by introducing a novel avenue to enhance nationwide insurance penetration. In the insurance industry, the PoSP model stands as a formidable force, boasting a total network of over 14 lakh plus agents—merely 15% lower than the combined size of general and health insurer agent networks, as of 2022.

How PoSP is Fueling Economic Growth

One of the remarkable achievements of the PoSP model lies in its ability to empower individuals from diverse backgrounds. With minimal training, even undergraduates can pursue careers as PoSPs; not just creating jobs but also fueling the nation’s economic growth. Serving as catalysts, these PoSP agents extend their reach to every family, aligning with IRDAI’s ambitious goal of insuring every Indian by 2047.

The true merit of the PoSP model lies in its user-friendly design, fostering a seamless dissemination of pre-underwritten insurance products. The simplicity and accessibility not only enhance the outreach of insurance offerings but also improve the overall efficacy and servicing of insurance policies. The PoSP framework represents a significant leap toward democratizing access to insurance services, acting as a launching pad for aspirants to embark on a rewarding career journey in the dynamic and growing insurance industry.

Rapid Growth

In just eight years, the number of PoSP agents has soared exponentially, trailing the combined general and health insurer agent network size by a mere 15% and outpacing them in growth. The PoSP model has proven to be not only resilient but also highly adaptive to the changing dynamics of the insurance ecosystem. 

PoSPs sell basic and pre-underwritten insurance products, operating on a transactional level thereby meeting the insurance needs of a large section of the Indian population. When partnered with brokers, PoSPs become advocates for policyholders, offering personalized attention and prioritizing their interests. The PoSP model introduces flexibility through partnerships with insurers or intermediaries, granting PoSPs the autonomy to offer insurance plans based on policyholder preferences and needs. This not only enhances customer satisfaction but also relieves brokers of the burden of fixed operational costs and employee expenses.

Crucial Role in Economic Inclusion

The PoSP framework’s low entry barriers open doors for individuals in Tier II cities and beyond, accelerating insurance penetration. This inclusive model creates an additional income stream for individuals from diverse backgrounds, including small shopkeepers, housewives, and unemployed individuals, fostering economic inclusion and entrepreneurial spirit. The impact is dual-fold: a boost to the economy and a simultaneous surge in insurance penetration.

Conclusion

As we reflect on the journey of the PoSP model since its inception in 2015, it is evident that it has played a pivotal role in reshaping India’s insurance ecosystem. Beyond democratizing insurance access, PoSP has empowered individuals from varied backgrounds, becoming a catalyst for economic growth. To ensure the continued progress of the insurance sector, it is crucial to recognize the importance of the PoSP model and strengthen it.

(The author is Managing Director at Landmark Insurance Brokers Pvt. Ltd. Views are the authors own and not necessarily that of financialexpress.com)