Becoming an Insurance Agent vs a Point of Sale Person (POSP)
Health insurance is one of the fastest-growing markets in the country as less than one percent of Indian population has health insurance. IRDAI, in its effort to increase insurance penetration allowed for the introduction of a distribution model (in 2005) called Point of Sale Persons (POSP). This model of insurance distribution was not meant to compete with the traditional Insurance Agents but intended to reach those clients who were not being serviced by insurers for one reason or another. So, what do POSP do and how do they differ from an insurance agent? Let’s take a look.
1. Qualification and Training
A health insurance agent needs to have graduated the 12th standard. They need to pass the examination conducted by IRDAI and they need to complete over 50 hours of training to get their license which is valid for 3 years.
A POSP, on the other hand, needs to be class 10th pass. They also need to pass an examination but they undergo only a 14-hour training session to be granted a certificate which remains valid for 5 years.
2. What can they sell?
A health insurance agent can sell health policies from one insurer only, with which he is affiliated. A POSP, on the other hand, can sell policies of multiple insurance companies and across both life and non-life categories. A POSP can sell motor insurance, home insurance, travel insurance, and personal accident policy among other things.
The difference between them lies in the kind of policy being sold. A health insurance agent can sell as well as act as a consultant to the policyholder. They can sell complex health products to people, companies, and businesses. They can help them tailor the policies to meet their exact needs, and they can advise clients on the policy matters. They can sell high-risk products and their commissions are usually higher.
A POSP can only sell simple and transparent insurance plans which provide entire protection and tax benefits. They sell over-the-counter products that are pre-underwritten and approved by IRDAI. These products are so basic in nature that they come with clear and straight fixed benefits and do not need elaborate explanations for the client. They do not sell complicated or high-risk products and hence earn lower in commissions.
Unlike insurance agents, POSP rely on insurance broker/company for servicing demands of his customers
3. Where do they operate?
Insurance agents, currently, operate in large cities and towns depending upon the Insurance companies’ requirements. Yes, they can expand into new areas and even sell insurance online but since their products earn higher commissions, they can focus on selling high-quality products than selling a large number of simple ones to earn more.
A POSP largely caters to first-time customers looking for simple and basic insurance policies. They can expand across geographies including metro, urban, semi-urban, and rural areas to serve customers. Since the products they sell are basic, they depend on selling a large number of products to earn more. A POSP is better suited to increase the net coverage of insurance and are equipped with digital equipment to make the sales.
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Tags: health coverage, health insurance, Insurance Agent, insurance policy, POSP, Sell Insurance