Taking Insurance to Bharat: Power of the PoSP model

The empowerment enables agents to provide personalised guidance and support to policyholders, facilitating informed decision-making in insurance purchases. Image: Shutterstock

India's insurance industry holds immense potential, with 14 million people forecasted to join the middle class by 2030. Yet, it grapples with low penetration rates, standing at a mere four percent compared to the global average of seven percent. To address this disparity, there is a pressing need for increased awareness, innovative distribution channels, and enhanced customer trust in the system. According to a leading industry report, "How India Buys Insurance?" over 80 percent of policyholders, particularly those from Tier-II and Tier-III cities, prefer to research online and buy offline. Familiarity with agents is an essential requirement for this demographic. IRDAI, in a progressive step, has introduced the Point of Sales Person (PoSP) model to make it easier to sell simple insurance products and drive penetration. This model is a compelling blend of technology and a human interface that makes the insurance journey smoother and more credible for consumers.

The PoSP model is a win-win for consumers, agents, and insurers. The model has seen rapid adoption with over 20 lakh PoSP agents in India. It gives agents better earning opportunities, insurers get the ideal means to tap underserved sections, and customers can have a local touchpoint to all their insurance needs.

Harnessing the power of phygital through PoSP
At the core of the PoSP model lies the empowerment of agents through comprehensive training, access to advanced technology, and attractive compensation structures. This empowerment enables agents to provide personalised guidance and support to policyholders, facilitating informed decision-making in insurance purchases. By seamlessly integrating traditional agent networks with digital tools, the PoSP model enhances distribution efficiency while preserving the human touch in sales interactions. Moreover, by equipping agents with a diverse range of insurance products and investment options, insurers can cater to varied customer needs and preferences, thereby building their confidence in the industry's inner workings. The PB Partner network is spread across 19.1k pin codes across India. All in all, Tier-II and Tier-III cities account for almost 50 percent of the incoming business.

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Service is the future of insurance in India
The trajectory of the insurance sector is unmistakably leaning towards a service-centric approach. There's a notable shift towards crafting personalised insurance solutions that are finely tuned to cater to individuals' unique needs and lifestyles. Moreover, integrating data analytics has changed how risks are assessed in insurance. This evolution enables insurers to adopt more accurate pricing strategies, thereby optimising the balance between risk and coverage. The PoSP model is of utmost importance in this context. It gives the customers an ideal mix of all the factors one would want in their insurance experience.

Enhancing distribution through technology integration
Technological integration is pivotal in the PoSP model, enabling agents to deliver efficient and transparent insurance services. AI-driven tools, such as PB Inspect, streamline claim processes, reducing complexities and expediting settlements. Through strategic partnerships with InsurTech companies, PoSP agents leverage innovative solutions to extend insurance reach to previously underserved regions, fostering greater accessibility and inclusivity. Additionally, the PoSP model facilitates seamless online-offline integration, catering to the preferences of those who research online but prefer to buy through in-person interactions with known agents, thereby bridging the gap between digital convenience and personalised service.

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Expanding reach beyond metro cities
Historically, insurance access has been skewed towards metro cities, leaving Tier-II and Tier-III cities underserved. The PoSP model addresses this imbalance by empowering agents across geographies with standardised training and expertise. With a strong preference for in-person interactions, PoSP agents serve as trusted advisors, bridging the gap between insurance providers and individuals in remote areas, thereby promoting financial inclusion and literacy. By nurturing a network of PoSP agents in rural and semi-urban areas, insurers can penetrate untapped markets and build enduring relationships based on community trust and localised expertise, driving insurance penetration beyond urban centres.

Empowering agents, enriching customers
Central to the success of the PoSP model is the empowerment of agents, both financially and intellectually. By equipping agents with in-depth product knowledge and flexible payment options, insurers enable them to cater to each need effectively. This symbiotic relationship between agents and policyholders fosters a pull-based model, wherein informed decision-making drives insurance purchases, leading to greater customer satisfaction and loyalty. Furthermore, insurers can enhance agent competency and retention by providing agents with continuous training and professional development opportunities, thereby ensuring long-term sustainability and growth in the PoSP distribution channel.

India's insurance market is poised for rapid growth, projected to outpace all G20 nations from 2024 to 2028. For a long, the challenge facing the industry has had to do with enabling physical interaction with well-trained advisors in an economically sustainable manner. The PoSP model, supported by regulatory frameworks and technological advancements, presents a unique opportunity to unlock untapped segments of the population and drive greater insurance adoption.

The author is Joint Group CEO of PB Fintech

The thoughts and opinions shared here are of the author.