With the Insurance Regulatory and Development Authority of India (Irdai) mandating that e-policies will have to be issued for certain kinds of insurance plans —term- and non-term life plans with sum assured of Rs 10 lakh and Rs 1 lakh or annual premium of Rs 10,000; all individual motor and overseas travel plans; and retail health policies having sum assured of Rs 5 lakh or more or premium of Rs 10,000 or more — bulk of both life and non-life industry’s products will soon go the electronic way.
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The biggest advantage of the e-insurance account will be that once a policyholder opens an e-Insurance Account (eIA), the same know-your-customer norms can be used to purchase the other policies. Any change in personal details such as telephone number, address, e-mail, etc, will have to be updated only once, and not with all insurance companies, like it is being done now.
This will result in all policies being kept in a single eIA account, opened by the customer with an insurance repository (IR). Policyholders can open an eIA with either one of the IRs or with the insurance company. There is no additional cost for the policyholder. It will save policyholders the hassles of paperwork and provide them ease of maintenance.
“But, getting used to the e-form is a change of behaviour. That can be a challenge. There can be some resistance from customers, similar to when stocks were demateralised,’’ says Mohit Rochlani, director, operations and IT, IndiaFirst Life Insurance.
This is also expected to help in renewals, especially with general insurance policies that are annual in nature. “IRs can send renewal reminders to customers and facilitate payment of renewal premium,” says Aseem Goyal, head of operations and customer care at Bajaj Allianz General Insurance.
The government will also have to step in to ensure smooth transition. In motor policies, one challenge could be recognition of the e-policy at the ground level, says Sanjay Dutta, head of underwriting at ICICI Lombard General Insurance. “State governments will have to recognise e-policies, like Telangana has done. Else, there has to be a change in the Motor Vehicles Act.’’ Just as travel documents like tickets can be shown on the mobile, even this will get accepted, he adds.
The regulator has also said that physical policies must be issued, unless there is some exemption and that insurance companies can offer discounts in case of e-policies. “Offering discounts is possible only in those cases where Irdai exempts insurers, in which case the insurer has the option to directly send the electronic policies to the policyholders under regulation. The discount on account of savings in this regard could be around Rs 100 per policy,” says C L Baradhwaj, senior vice-president (compliance) & chief risk officer at Bharti AXA Life Insurance. Another point that requires clarity is whether digital signatures will be a must or some other form of electronic verification, like the Aadhaar number, will be sufficient, adds Rochlani.