27th India Fellowship Seminar
Cyber risk and Terrorism risk -
Increasing insurance
Challenges
in pricing penetration through
POS - challenges and solutions
Supervisor:
P.A. Balasubramanian, FIAI
Presenter:
Richa Mathur
Guide :
Bikash Choudhary
1st June 2017
Mumbai
Indian Actuarial Profession
Serving the Cause of Public Interest
Agenda
Cyber risk and Terrorism risk  Current Scenario of Indian Insurance Industry
Challenges in pricing
 Regulatory Framework and Timelines
o Non Life and Health
o Life
 What is a POS Product
o Non Life and Health
o Life
Supervisor:
P.A. Balasubramanian, FIAI
 POS Persons
 POS – an Opportunity
 Challenges and Solutions
1
Cyber risk and Terrorism risk -
Insurance Penetration
& Density
Challenges
in pricing
Supervisor:
P.A. Balasubramanian, FIAI
2
Regulatory Framework – Non Life & Health
To increase insurance penetration in the country IRDAI introduced
‘Point Of Sales (POS)’ regulations
Non Life & Health
Guidelines
Oct 26, 2015
Cyber risk and Terrorism risk Challenges in pricing



Guidelines on POS Person - Non Life and Health : 26 Oct 2015
IRDA/lNT/GDL/ORD/183/10/2015
Circular on Guidelines on POS Person : 11 March 2016
Supervisor:
IRDA/INT/GDL/ORD/047/03/2016
P.A.
Balasubramanian, FIAI
Govt. approved Crop Insurance Scheme through POS : 24 Jun 2016
IRDA/INT/CIR/PSP/123/06/2016

Addition of Products for Sale through POS Circular : 13 July 2016
IRDA/INT/CIR/PSP/139/07/2016

Revision in Guidelines on POS Person : 16 Mar 2017
IRDA/ lNT/ GDL/ PSP/058/03/2017
Circular on POSP:
Nov 7, 2016
Govt. approved Crop
Insurance Scheme
through POS Jun
24, 2016
Addition of Products
of Sale through POS
–July 13 ,2016
3
Regulatory Framework – Life
 Guidelines on POS Product– Life Products : 7 Nov 2016
IRDA/ LIFE/GDL/222/11/2016
 Guidelines on POS Person– Life Products : 7 Nov 2016
IRDA/ LIFE/ORD/GLD/223/11/2016

Supervisor:
Modifications
Guidelines on POS Person
: 7 Feb 2017
P.A. Balasubramanian,
FIAI
Regulations on
POS Products
and Persons:
Nov 7, 2016
Modifications to
Guidelines Feb
7, 2017
 Circular on POS Database : 13 Apr 2017
IRDA/ lNT/ POS/ GDL/ PSP/084/04/2017
Circular on POS
Database Feb 7,
2017
4
POS Product – Non Life and Health

The POSP can only sell the following pre-underwritten products :
Motor Comprehensive Insurance Package Policy for Two-wheeler, private car and commercial vehicles

Third Party Liability (Act only) Policy for Two-wheeler, private car and commercial vehicles
Cyber risk and Terrorism risk Challenges in pricing


Personal Accident Policy

Travel Insurance Policy

Home Insurance Policy

Any other policy specifically approved by the Authority
Following additional products were included:
Crop Insurance – Government insurance schemes such as
o Pradhan Mantri Fasal Bima Yojna (PMFBY)
o Weather Based Crop Insurance Scheme (WBCIS)
o Coconut Palm Insurance Scheme (CPIS)

Hospital Cash Policy – fixed benefit in form of cash for everyday of hospitalization
with a limit of Rs.1 lakh per individual

Critical Illness Policy which covers 8-9 CI with the maximum sum insured limit
of Rs.3 lakhs per individual

Cattle/ Livestock

Agricultural Pump set Insurance

Fire & Allied Peril Dwelling Insurance
5
POS Life Product
 These are Over the Counter, simple plain vanilla products in which each
benefit is: Simple to understand
 Stated upfront clearly
 Fixed/ Pre-defined
 Only non-linked and individual insurance
products
 Product names to be pre fixed with the wordPOS(POS- Product Name)
 Inbuilt ADB rider allowed
 Certificate of compliance from the CEO and AA
to be submitted along with product filing
Pure Term
Insurance
Product with
or without
return of
premium
Non-linked
Nonparticipating
endowment
(money back
feature
allowed)
Immediate
Annuity with
Return of
Purchase
Price on
Death
“Any other
product
category” if
permitted by
the Authority
 Existing products can be sold after suitable
modification and approval by the Authority
6
Additional Features of POS Life Products
Key Features Document (KFD) cum Proposal Form for POS Life Products
Cyber risk and Terrorism risk -
 Proposal form to consist of two parts Key Feature Document
 Proposal form
Challenges in pricing
Contents of KFD
Design
• Both the parts to be joined by
perforation for the ease of
separation
• KFD cum Proposal Form to
carry Unique Reference
Number on both parts
• Cover all key benefits including
but not limited to:
•
•
•
•
•
•
Sum Assured on death
Maturity benefit
Surrender value
Paid up value(if any)
Exclusions
Registered name and address
of the life insurer with logo
7
Entities Authorized To Sell POS Life Products
POS Person Life Insurance
Individual
Agents
POS-Person-Life
Insurance
Intermediaries authorized to solicit Life Insurance
products
Insurers directly
8
Point of Sale Person (POSP)
Cyber risk and Terrorism risk Appointment
Appointed by insurers and authorized insurance intermediaries
Identification of POSP by Aadhar card no. or PAN card no.
Challenges in pricing
Eligibility Criteria
18 years of age
10th standard pass
Supervisor:
P.A. Balasubramanian,
FIAI
In-house training of 15 hours for
the POSP
Training &
Certification
Commission
Conduct an examination on completion of training
Written agreement with passed POS-persons for sale of POS-products
Maintain a record of the training and examination for at least 5 years
For POSPs engaged by intermediaries no commission is payable by the insurer
For POSPs engaged directly by the insurer, commission as proposed in the product F&U
and approved by Authority as applicable to individual agents is payable
9
Point of Sale Person – Life
Tagging of Proposal Form & Insurance Policy to POSP
 All proposal forms (physical or e-form) and policies to carry provision to record Aadhar card or PAN card number of
sourcing POS-Person
 In case of sale through insurance intermediary, Aadhar/ PAN card number to be captured in Proposal Form and Insurer
to capture the same with the policy
 Authority may consider the conduct of POS-Person as one of the factors while renewing the certificate of registration of
the insurance intermediary
Compliance
 Life Insurers & Insurance Intermediaries shall make suitable provision in their Policy Administration System to capture
Aadhar card or PAN card number of POS Person – Life Insurance
 Authority shall specify the format and manner of maintaining the records and filing returns which the insurer and the
intermediary shall maintain in electronic form which can be accessed by the Authority on a remote location basis
 Formats shall give the number of policies sold and the premium collected by POSP on a monthly basis
10
POS – An Opportunity!
Facilitate the risk
growth ofand
insurance
business to increase risk
insurance-penetration and density
Cyber
Terrorism
Challenges
in process
pricing
Simplified certification
for agents enables easy sales and policy acquisition
Helps to create brand in rural areas / small cities in the long term
Relaxed qualification for POS-persons
Instant issuance will be appreciated by the policyholder
Help reduce per policy cost and making products competitive
Waiting period up to maximum 90 days from the date of acceptance of risk
11
Challenges
No medical underwriting will lead to adverse selection against the company
TAT for issuance of the policy/acceptance of risk and communication of
acceptance:
 Not more than 2 working days (excluding holidays)from the date of
collection of proposal at the point of sale
 In case of rejection of proposal for any reason, the refund of payment to be
done to the proposer/life assured within 7 days from the date of decision
12
Challenges
Risk of Mis-selling due to relaxed eligibility requirement
New market with no experience
Lapses would be uncertain
Decision to make modifications to existing products or file new products
Changes required in Policy Administration System
13
Solutions
Waiting period up to maximum 90 days from the date of acceptance of risk
Stringent non medical underwriting
Monitor experience
Product Experience
POSP - Authority may consider the conduct of POS-Person as one of the factors while renewing
the certificate of registration of the insurance intermediary
Supervisor:
Tracking of POS through centralized database based on IRDAI circular dated 13
P.A.
Balasubramanian, FIAI
th
April ‘17
Identify products in current portfolio which could be modified
Cost effective
Ease in obtaining regulatory approval
Develop systems and build robust framework and controls to meet TAT and minimize
operational errors
Cost vs Benefit Analysis
14
Thank You!
Supervisor:
P.A. Balasubramanian, FIAI