Technology to Drive Point of Sale Distribution of Insurance

By Manoj Jain, MD, Shriram Life Insurance

Indian insurance industry has come a long way since the privatization of industry in the year 2000. Over the last 17 years, several new models, channels of distribution are experi­mented, new range of products are launched and the industry quietly adopted the new distribution channels in its quest for reaching out to the masses. Over the years since privatization, insurance industry has made significant progress and the total life insur­ance premium which was at INR 34989 Cr. during the FY 2000, stood at INR 366943 Cr. during FY 2016.

Insurance Penetration (Total Insurance premium measured as a percent of GDP) for India is at 3.44 percent during 2015-16 as against the global average of 6 percent, which indicates the huge untapped potential for insurance in India. Insurance Density (measured as per capital insurance) for India is at USD 54 as against the global average of USD 600, this indicates the quantum of un­der insurance in the Indian market.

With the advent of the newer chan­nels like Banc as­surance, Brokers and Telemarketing, the significance of agency channel, which was the only distribution channel in the pre privatization era, has been coming down over the years. Despite all these channels of distribution, the insurance penetration of India continues to be low indi­cating a large section of the population is still uninsured or underinsured.

IRDAI, regulator for the insurance industry has been proactive and continuously engages with the industry and in order to facilitate the en­hancement of the distribution reach, IRDAI has come up with new guidelines on Point of Sales distribution recently. The objective of these guidelines is to make the appointment of the Point of sale person simple and allow him to sell simple and easy to understand product to the customers. IRDAI has issued separate guide­lines on POS person and POS products.

The POS model opens up a vast new oppor­tunity for distributing life insurance products as the process of ap­pointment of POS and product offer­ings got simpli­fied. Any FMCG distributor or pharmaceutical retail chain or any organisation having its own distri­bution outlets can quickly become a distributor of life insurance product by adapting to the POS mode. The insurance company or an IRDAI ap­proved intermediary can impart the training, conduct examination and issue certificate to the POS person to sell life Insurance. Secondly, the Point of Sales person can sell only simple vanilla type, easy to under­stand products wherein each and every benefit under the product is predefined and disclosed upfront clearly to the customer. Thirdly, most importantly the guidelines stipulate that the policy has to be is­sued with two working days of re­ceipt of the proposal. In the event of the policy could not be issued, the refund of the premiums collected has to be refunded within 7 days. These service level definitions pave the way for fully digitised, technol­ogy driven policy issuance and cus­tomer service.

For a huge majority of custom­ers who live in the hinterland of our country, POS models brings the life insurance policy and servicing capability closer to them. With the IRDAI dictum of offering simple, easy to understand products with predefined benefits, the opportunity of missale by the distributor is mini­mised to a great extent. Secondly, the prescriptions on the TAT for issuance and refund by the IRDAI, will put pressure on the operational process of the life insurers and will necessitate them to go fully technol­ogy driven customer interface.

Considering the vastness of our country, a fully technology enabled customer service is key to the suc­cess of Point of Sale distribution. A technology driven POS process will enable the distributor, who is lo­cated in the remotest corner of the country to quickly issue the policy and to provide speedy customer ser­vice. The technology enabled POS system will have multifold effect on the business of life insurance. Re­duction in cost, quicker TAT in is­suance of policy, superior customer experience and seamless operations are some of the benefits that will ac­crue to the life insurance companies due to technology adoption in POS.

Adoption of the right technology for POS model is very critical for the success of the POS as a channel of distribution of insurance products. Considering the potential scale in POS distribution coupled with the knowledge levels of the POS per­son, a simple, easy to use technol­ogy driven application which has the capability for scaling up to large numbers becomes a prerequisite. The choice of technology, nature of devices depends on the proposed scale definition of the life insurance company. The technology adopted need to support the POS person in providing the right information on the product and also need to have in­built sales tools to enable POS per­son to close the sale faster thereby improving the quality of sales, which may lead to higher persistency. The technology should provide for easi­er, smoother and seamless interface to the user, i.e. the POS person in filling the data, KYC compliance and also in fund/premium transfer. With several technologies available, the POS model for distribution can help the life insurance companies in reaching out to the masses at an affordable cost by providing better customer experience.

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