India’s insurance industry has great potential, as 14 million people are predicted to join the middle class by 2030. Yet, it is struggling 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 insurance offline. Familiarity with agents is an essential requirement for this demographic. The Point of Sales Person (PoSP) model has been introduced by IRDAI in a progressive manner to simplify the selling of simple insurance products and increase 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 been rapidly adopted by over 20 lakh POSP agents in India. It provides agents with better earning opportunities, insurers with the ideal means to tap into underserved areas, and customers with a local touchpoint for all their insurance needs.
Harnessing the power of phygital through PoSP
The PoSP model’s foundation is 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. The PoSP model’s integration of traditional agent networks with digital tools enhances distribution efficiency while maintaining 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. There are 19.1k pin codes spread across India in the PB Partner network. Almost 50 percent of the incoming business is accounted for by Tier-II and Tier-III cities.
Service is the future of insurance in India
The trajectory of the insurance sector is unmistakably leaning towards a service-centric approach. There is a notable shift towards crafting personalized 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 optimizing the balance between risk and coverage. The PoSP model is of utmost importance in this context. It provides customers with an ideal mix of all the factors one would want in their insurance experience.
Enhancing distribution through technology integration
The PoSP model relies on technological integration to enable agents to provide efficient and transparent insurance services. AI-driven tools, such as PB Inspect, streamline claim processes, reducing complexities and expediting settlements. PoSP agents use innovative solutions to expand insurance coverage to previously underserved regions through strategic partnerships with InsurTech companies, resulting in 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.
Expanding reach beyond metro cities
Insurance access has historically been biased towards metro cities, leaving Tier-II and Tier-III cities underserved. The PoSP model addresses this imbalance by empowering agents across geographies with standardized training and expertise. PoSP agents, who have a strong preference for face-to-face interactions, act as trusted advisors and bridge the gap between insurance providers and individuals in remote areas, thus 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
The PoSP model’s success hinges on 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, where informed decision-making drives insurance purchases, leading to greater customer satisfaction and loyalty. Furthermore, insurers can enhance agent competency and retention by providing continuous training and professional development opportunities, thus ensuring long-term sustainability and growth in the PoSP distribution channel.
India’s insurance market is expected to grow rapidly, surpassing all G20 nations from 2024 to 2028. For a long time, the challenge facing the industry has been to enable physical interactions 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.
