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Direction: Read the following passage carefully and answer the questions that follow. Insurance regulator IRDAI has allowed distribution of all micro-insurance products through point-of-sales (PoS), with an aim further increase insurance penetration in the country. The Insurance Regulatory and Development Authority of India (IRDAI) has created a special category of insurance policies called micro-insurance policies to promote insurance coverage among economically vulnerable sections of society. A micro-insurance policy is a general or life insurance policy with a sum assured of Rs 50,000 or less. Agreeing to the suggestions of insurance companies, IRDAI in a circular has done away with the practice of pre-fixing the word ‘PoS’ on life, general and health products sold through PoS. The regulator said it has received representations from insurance companies requesting to do away with the prefix ‘POS’ in the product name. Insurers made representations to change the norms that made it mandatory for every policy sold through the ‘Point of Sales Persons’ to be separately identified and pre-fixed by the name ‘POS’. IRDAI said the requirement was to identify the person involved in the sales process. The IRDAI (Protection of Policyholder’s Interest) Regulations, 2017, under the matters to be stated in life, general and health insurance policy, makes it mandatory to give the details of the person involved in the sales process. “By virtue of this requirement, the need to have the prefix ‘PoS’ becomes redundant as the insurance policy itself will carry the details of the person selling such a policy,” the regulator said. The Authority, “hereby, discontinues requirements” of using the word ‘PoS’ prefixed before the PoS product name for life, general and health products. Similarly, IRDAI said it has been observed that advantages such as higher insurance penetration, lower prices, increased choice to customers, which would otherwise accrue to the policyholder by making micro-insurance products available through POS channel are being lost. “Therefore, the Authority after reviewing the position, hereby allows all Micro Insurance products of Life, General and Health insurance to be distributed through the POS also,” the circular said. On the manner of dealing with cases of health/personal accident (PA) policies where sum insured crosses the limit specified under the POS guidelines, IRDAI said the sponsoring entity is allowed to recognise such policies as being sourced by the POS and pay the fees to the POS.
Which among the following correctly explains the reason of the new guidelines of the IRDAI regarding the withdrawal of the prefix POS in the names of the insurance policies sold by POS?
IRDAI is not authorized to sell policies online since it is the regulating body of the insurance industry in the country but it also needs to keep a tab on the authorized intermediaries.
IRDAI made it mandatory to add the prefix of the policy nature in any policy sold by the insurance companies in India.
The IRDAI now possesses the information regarding the point of sales persons selling the insurance policies in India and it does not make any sense to identify such policies by name.
The IRDAI has made it mandatory that all the policies issued by the micro insurance agents will be sold through point of sales persons only.
None of the above
Correct Answer is (c).Refer to, “The IRDAI (Protection of Policyholder’s Interest) Regulations, 2017, under the matters to be stated in life, general and health insurance policy, makes it mandatory to give the details of the person involved in the sales process. “By virtue of this requirement, the need to have the prefix ‘PoS’ becomes redundant as the insurance policy itself will carry the details of the person selling such a policy,” It is clear from the above lines that IRDAI has made it mandatory now to add the details regarding the point of sales persons selling the insurance policies in the country and therefore, now there is no need to add the prefix in the name of the product. Among the given options, option A is not correct since it does not make any sense as IRDAI is the authority and it will not issue guidelines for own whereas option B can be eliminated on the ground that the reason given in this option is not correct. Option D can also be eliminated because the information given here is not correct. Only option C explains the actual reason of the new guidelines issued by IRDAI regarding the POS channel of selling the insurance policies. This makes option C the correct choice among the given options.
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