Do(s) and Don’t(s) of POSPs

TheDo’s and Don’ts of becoming a POSP:

1.A POSP can sell insurance through probable buyers. Probable buyers can be anybody. They can be your friends, your family, or relatives. He/shecan also approach influential people like politicians, actors, professors etc. He can also approach his satisfiedcustomers through whom the good word of mouth can spread.

2.A POSP is always expected to sell in an ethical manner.What is ethical selling?In Ethical Selling the customer’s needs and requirements are given the topmost priority. All information regarding the customer should be kept confidential. Also, the POSP should follow a consultative way of selling rather than just selling.

3.A POSP should provide the customer with After Sales Service. Since Insurance is a completely service–driven industry, therefore, providing After Sales Service is not a one–time activity. It is a continuous process. Thus, providing an after sales service is very important. It helps to maintain healthy and good relationship with the customer and also, helps to increase business.

4.A POSP must know which products he/she isallowed to sell.For example, aPOSP cannot sell group policies. Hence, one must be aware of what products he/shecan sell.

5.A POSP must acquire all the documents as per the KYC norms. After acquiring the form from the customer he must submit it with the insurance company.

Grievance Redressal Mechanism

It is very important for a POS to know the steps of grievance redressal. In case if anyservicing or claims related issuearisesthen the policyholder can go through these following steps:

• Contact the call centre number of his Insurance Company.The insurance company provides a unique complaint IDfor the same and tries to resolve the issue.
• If the policyholder has not yet received the resolution orisnot satisfied with the response then he/shecan login to igms portal(https://www.policyholder.gov.in/IGMS_Complaint_Logging.aspx). IGMS isanintegrated grievance management system. This system facilitates online registration of policyholder’s complaints and the ticket raised, gets registered with IRDAI. Also,simultaneously it gets reflected into the insurer’s account. It helpsin trackingstatus of the complaint. This is then managedby the grievanceredressal cell of the respectiveinsurance company.
• If this also leaves the policy holder dissatisfied, the policy holder may approach the ombudsman for redressal, provided the amount does not exceed 30 lakh rupees. Insurance ombudsmanis a non–judicial authority created by Central Government.
• One can even go to the consumer forum but then he should be aware of the three tier judicial system. oThe first is the District Forum: Financial Jurisdiction is 20 lakhsoThe second is the State Commission: Financial Jurisdiction is above 20 lakhs but not exceeding 1 crore. They hear appeals against district forum and oThe third is the National Commission: Financial Jurisdiction for above 1 crore, where appeals against state commission is taken care of and appeal’s against national commission lies with the supreme court.

A policy holder must understand how the grievance redressal process works and as a POSP onemust educate theircustomers onthe same.

Anti–Money Laundering: AML and KYC Norms

What is Money Laundering?

Money Laundering is the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.In simple words, it is the method by which “dirty money” received from criminal activities is processed through legitimate businesses and converted into “clean money”. Once cleaned, the money cannot be easily traced to the person originating the transaction or to the criminal origin of the funds.

To prevent money laundering in the insurance sector, IRDAI has setup certain guidelines via insurance products andhas also askedinsurance companies to report suspicious transactions.

Some of these regulations are:
Each insurer must establish and implement policies like:

• Monitoring and Reporting Cash Transactions Cash premium of more than Rs 1Lakh should never be accepted. Premiums beyond Rs 1Lakh should be remitted by cheque or demand draft or credit card or anyother banking channel. If the total premium crosses the limit of rupees 1Lakhs no part–payment from different modes are to be accepted.In case if the total premium exceeds Rs 50 thousand but does not exceed Rs. 1 lakh, cash may be collected, subject to collection and verification of PAN card of proposer which is mandatory.
• Premium more than 1 Lakh Be it by any mode cash, credit card, debit card, etc. If the premium is more than 1 lakh per annum,then proper investigation and frequent review should be done.
• Recordkeeping Every insurer is required to maintain the information/ records relating to verification of clients for a minimum period of 5 years.
• Customer Classification Customers should be classified into high risk and low risk.
• KYC (Know your Customer) In case of direct sales of life insurance products, regulatory guidelines mandate that insurers should conduct KYC before the sale of the policy. Linking of Aadhaar number to the insurance policy has also been made mandatory, this is applicable forboth life and general insurances.
  To summarise, if any such suspicion arisesthen it should be immediately informed to the compliance officer.
  

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IRDAI has introduced regulations to safeguard the interests of the policyholders. Let us understand some of these regulations:

• Every POSP needs to fully disclose all details about the product. Good faith needs to be followed and there should be transparency.
• As far as POSP of broker companies are concerned, comparison should be provided to the prospect and the most suitable policy as per the client’s need should be recommended.
• Insurers, brokers, and intermediaries should follow the code of conduct.
• Proposal form is compulsory in other than marine cargo.
• The insurers shall ensure that a sale executed over distance marketing modes such as internet, SMS, telemarketing, interactive electronic medium etc. shall be undertaken by authorised and qualified salespersons who are specialised in his behalf by the authorities.
• A policy cannot be called in question after three years of it being issued. Insurers will find it impossible to repudiate claims after three policy years due to the amendment.
• Information about Riders: Riders are the additional benefits provided with the base policy.In life insurance these additional benefits are termed as “Riders” and in general insurance they are referred to as “Add–ons”. But in both the cases they mean the same.In case of life insurance,the additional covers premium, i.e., therider’s premium should not exceed 30 percent.
• Once the proposal is accepted and the premium is paid, the client can return or cancel the policy within the free–look period, which is applicable to only health and life insurance policies.A 15 days free–look is provided in cases of health and life insurance. A free–look of 30days is applicable to electronic policies and the ones obtained through distance mode in life insurance.

What is a free–look period?Free–look period is a time period in which the policyholder can review the terms and conditions of the policy and disagree to any of those terms or conditions. During a free-look period the policyholder has the right to cancel the policy. If the policyholder wishes to cancel the policy then he gets the premium amount as refund after deducting few expenses like the stamp duty charges, medical test expenses and pro rata premium.