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POSP Onboarding and Compliance at Scale: What IRDAI Requires and How Insurers and Brokers Keep Up

IRDAI's POSP rules are short, but at network scale they mean thousands of identity checks, 15-hour trainings, exams, certificates, POS codes, and conduct reviews. What the guidelines require, where onboarding breaks, and how AI with human review helps.

Team Aketud · ·10 min read
POSP Onboarding and Compliance at Scale: What IRDAI Requires and How Insurers and Brokers Keep Up

Point of Sales Persons (POSPs) are one of the fastest ways to take simple insurance to more of India. The rules that govern them are deliberately light: a Class 10 pass, fifteen hours of training, an exam, and a narrow shelf of simple products. That lightness is what lets a broker or insurer onboard hundreds of POSPs a month.

It is also where the risk sits. Every one of those POSPs has to be identified, trained, examined, certified, coded, tagged to every policy they sell, and watched for mis-selling, and the insurer or intermediary that engages them carries the responsibility for their conduct. At ten POSPs that is paperwork. At ten thousand it is an operations problem.

This post is for insurers, brokers, POSP networks, and health insurance teams. It sets out what IRDAI’s POSP guidelines actually say, where onboarding and conduct monitoring break down at scale, what the September 2026 distribution consultation proposes, and how to use AI to carry the volume while people keep the decisions.

What the POSP guidelines actually require

There are two sets of rules, one for general and health insurance and one for life.

General and health insurance. IRDAI’s Guidelines on Point of Sales Person – Non-Life & Health Insurers (IRDA/INT/GDL/ORD/183/10/2015, 26 October 2015) created the role. A POSP must be at least Class 10 pass and is identified by Aadhaar or PAN. The original guidelines used NIELIT for training and the exam. The 16 March 2017 revision (IRDA/INT/GDL/PSP/058/03/2017, effective 1 April 2017) moved that in-house. A general insurer, standalone health insurer, or intermediary that wants to engage a POSP must now:

  • check that the applicant is not already engaged with another insurer or intermediary, by cross-checking the database at the Insurance Information Bureau (IIB);
  • run fifteen hours of in-house training, following IRDAI’s model syllabus;
  • hold an examination after the training and issue a certificate to those who pass;
  • sign a written agreement setting out terms and conditions;
  • upload the POSP’s details to the IIB database by the end of the day; and
  • keep training and exam records for at least five years from the end of the financial year, ready for IRDAI inspection.

Life insurance. The Master Circular on Point of Sales Products and Persons – Life Insurance (IRDAI/LIFE/CIR/MISC/215/12/2019, 2 December 2019) sets the same core path. The candidate must be at least 18, Class 10 pass, and identified by PAN or Aadhaar. The insurer or intermediary runs fifteen hours of in-house training and an exam, issues a certificate, issues an appointment letter within 15 days of the exam, allots a POS code that goes on the appointment letter, and keeps training and exam records for five years.

What a POSP can sell

POSPs sell only simple, largely pre-underwritten products, and every product has to be identified as a POS product.

  • General and health: motor comprehensive package policies for two-wheelers, private cars, and commercial vehicles; motor third-party (Act only) policies; personal accident; travel; home; and any other policy IRDAI specifically approves. Each policy sold through a POSP is prefixed “POS –” with the product name. IRDAI has also published a list of products approved for sale through POSPs (18 June 2018).
  • Life: pure term (with or without return of premium), non-linked non-participating endowment, immediate annuity, non-linked non-par health products with fixed benefits, and other categories IRDAI permits, each within the boundary conditions in Annexure II of the master circular. POSPs can also distribute life micro-insurance products.

The product shelf matters operationally. A March 2020 modification to the life master circular requires insurers to have IT systems and internal controls so that POSPs sell policies only up to the allowed POS product parameters, and a December 2020 relaxation raised the endowment sum-assured cap to ₹25 lakh per insurer. In other words, the limits are meant to be enforced by the system at the point of sale, not discovered at audit.

Who is accountable for POSP conduct

This is the part that changes how a network has to be run. Under both sets of rules:

  • every proposal form and policy must record the POSP’s identity (POS code for life; Aadhaar or PAN for general and health), so each policy is tagged to the person who sold it;
  • the insurer, or the intermediary for sales it makes, is responsible for the conduct of its POSPs, and misconduct exposes it to penalty under Section 102 of the Insurance Act, 1938;
  • the conduct of an intermediary’s POSPs is one of the factors considered when its registration is renewed;
  • insurers and intermediaries must keep records of POSPs and the business they procure and file returns with IRDAI. For life, intermediaries pass their Annexure V data to the insurer, which files it half-yearly: the April–September return is due by 31 October;
  • for life POS business, the March 2020 circular requires a monthly review of complaints of unfair business practices and mis-selling, with corrective action.

So the real question for a growing network is not whether these controls exist. It is whether they still work when onboarding runs at hundreds of applications a week.

Where onboarding breaks at scale

In most POSP operations, the regulatory steps are simple. The volume around them is not.

  • Identity and document checks. PAN and Aadhaar details, Class 10 certificates, photographs, and bank details arrive as phone photos in mixed formats. Names don’t match across documents, scans are cropped, and the same applicant appears twice with different spellings.
  • The exclusivity check. For general and health POSPs, someone has to confirm against the IIB database that the applicant isn’t already engaged elsewhere, and upload new POSPs by the end of the day. When that is a manual batch, it slips.
  • Training evidence. Fifteen hours has to mean fifteen hours. Networks need attendance, module completion, and exam attempts on record for five years, not just a pass certificate.
  • Certificates, agreements, and codes. Certificates, appointment letters within 15 days for life, written agreements, and POS codes are often produced in separate systems, so a POSP can be selling before the paperwork is complete, or have paperwork with no matching code.
  • Policy tagging. If the POS code or ID isn’t captured cleanly on every proposal, the policy can’t be traced back to its seller, and every downstream control fails.

None of this is fixed by hiring more back-office staff. It is fixed by making every application complete, consistent, and evidenced on the day it arrives.

Conduct monitoring and mis-selling risk

Onboarding is the start. The larger risk is what happens after a POSP starts selling:

  • a POSP offering a product outside the POS shelf, or beyond its limits;
  • the wrong customer profile for a product, or key exclusions and waiting periods not explained;
  • unusual patterns: a spike in policies from one code, high early cancellations, repeated free-look returns, or complaints clustering around one POSP or one branch of the network;
  • grievances that mention promises the policy wording does not support.

These signals sit in different places: the policy admin system, the complaints register, call notes, WhatsApp messages, and grievance replies. A monthly review that has to stitch them together by hand tends to find patterns late.

What IRDAI’s September 2026 consultation proposes

On 23 September 2026 IRDAI released a two-part consultation paper, Recalibrating Economics of Insurance Distribution. The comment deadline has since been extended to 31 October 2026. These are proposals, not rules, but they point clearly at POSP operations:

  • POSPs would become one of four categories of Insurance Distribution Persons (IDPs), engaged by Insurance Distribution Entities (IDEs). A POSP could not work with more than one IDE.
  • IDPs would go through online training, testing, and certification, consent to source verification of their qualifications and certificates, and give Aadhaar and PAN at onboarding through an industry-wide platform.
  • IDPs would have to carry out a suitability analysis before offering any product and tell customers their functional identity.
  • Each policy would be tagged to the functional identity of the person who sold it, and incidences of mis-selling would be placed in the public domain through a proposed Public Insurance Registry, alongside commission claw-back for mis-selling.
  • The paper notes that training requirements across channels currently range from 15 to 75 hours, with a pass mark as low as 35 percent.

Whatever the final rules say, the direction is clear: seller-level identity, verifiable training, suitability evidence, and public mis-selling records. Networks that already hold clean, per-POSP evidence will adapt fastest.

Where AI fits, with people in charge

AI is useful here because the work is high-volume, document-heavy, and pattern-driven. It is only acceptable if every output can be checked and a named person owns each decision. That is the idea behind AI You Can Accept.

At onboarding:

  1. Read and cross-check documents. Extract name, date of birth, PAN, and qualification from uploads, compare them across documents, and flag mismatches, poor scans, and likely duplicates for a reviewer, with the exact field and image behind each flag.
  2. Send one consolidated request. If anything is missing, the applicant gets one message listing every gap, in English, Hindi, or Hinglish, instead of a trickle of rejections.
  3. Track the regulatory path. Show each applicant’s status against the required steps (exclusivity check, fifteen hours, exam, certificate, agreement or appointment letter, POS code, IIB upload) so nobody is activated with a step missing.

After activation:

  1. Check sales against the POS shelf. Flag proposals where the product, sum assured, or customer profile falls outside POS parameters before the policy issues.
  2. Surface conduct patterns. Bring cancellations, free-look returns, complaints, and grievance text together per POS code, so the monthly review starts from a ranked list with evidence, not a spreadsheet hunt.
  3. Explain the clause. When a customer asks a POSP about a deduction, exclusion, or waiting period, give the POSP the answer with the exact policy clause, so explanations are consistent and on record.

What AI should not do is approve a POSP, terminate one, or decide a mis-selling case. Those stay with compliance and distribution teams. AI prepares the evidence, flags exceptions, and records who decided what. Reviewers still check samples, and the system does not claim to catch everything; the aim is that the cases most likely to need attention reach a person sooner, with the evidence attached.

Where to start

  • Map your onboarding path. List every step from application to first sale, the system that holds each one, and how long applications wait between steps.
  • Make every application complete on day one. Validate documents on upload and send one consolidated request for gaps.
  • Link the evidence to the POS code. Training records, exam results, certificate, agreement, and IIB upload should all sit against the same POSP record.
  • Start the conduct review from data. Put cancellations, complaints, and grievances per POS code in one view before the monthly review, and record the action taken.
  • Read the consultation now. Comments close on 31 October 2026, and the proposals on seller identity and suitability will shape what POSP systems need next.

If you want to look at one live onboarding or conduct-review workflow with us, request an Insurance AI Workflow Review. It’s a short form, and we start from your own process. To ask a question first, you can also talk to Aketud.

Sources

— Team Aketud

Team Aketud

Writes for AKETUD on insurance operations and applied AI.

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