News24 Nov 2016

India:Regulator sees Point-of-Sales products as rural solution

24 Nov 2016

The insurance regulator IRDAI is urging insurers to introduce simpler point-of-sales (PoS) products for more broad-based selling in rural areas.

This follows the success of the government-backed life insurance scheme, Pradhan Mantri Jeevan Jyoti Bima Yojana, which offers cover of INR200,000 (US$2,920) for an annual premium of INR330.

While the PMJJBY scheme is a term insurance plan, IRDAI has asked insurers to create savings and annuity plans that can reach the masses in the countryside, reported Times of India.

About 70% of the population live in rural areas.  Life insurance companies have tried selling micro-insurance through agents, but the attempt has largely been a failure. In the rural sector, insurers are handicapped by the low sum insured and the absence of a strong agency network.

"Agents in urban centres get commissions of up to 15% for policies ranging from INR100,000-1 million. In rural areas, the sum insured usually does not cross INR100,000. To collect premium amounts as low as INR200, micro-insurance agents have to travel many miles. The small commissions they make give them no incentive," said an executive of SBI Life Insurance.

To increase distribution, IRDAI last year allowed a new channel which is the PoS person. PoS distributors sell simple insurance products in the non-life and health insurance space that do not require a lot of underwriting. Many insurers have already lined up PoS products.

Mr Mohit Rochlani, Director - Operations and IT at IndiaFirst Life Insurance, said: "These policies will be simple, with fixed premium amounts, pre-defined underwriting guidelines and all benefits stated upfront."



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