Insurance via e-commerce to make insurance cheaper for customers

The Insurance Regulatory and Development Authority of India (IRDAI) in its draft norms on e-commerce in the insurance space has said insurers can have differentiated pricing for products sold online. This will be done through a self-network platform.

Till now, the same product was not allowed to have different pricing on different channels.

"Insurers may offer differential pricing for the same product when sold through the Insurance Self-Network Platform. The pricing of every product shall be decided by the insurer and it shall be the responsibility of the insurer that product pricing is in compliance with the product filed with the authority," said IRDAI in its draft norms.

K G Krishnamoorthy Rao, MD & CEO of Future Generali India Insurance, said: "This will undergo a change now and we can provide discounts on premium for the same product online."

The regulations said the insurance self-network platform could be available on a website, a mobile application or both. However, only those entities granted certificate of registration by IRDAI will be allowed to sell the products. This include agents, intermediaries and insurance companies, among others. The products that will be sold through the website include life insurance, non-life insurance as well as standalone health products.

Regular products will be distinguished from the products being sold on these portals through the prefix "i". IRDAI has said that all products that are approved under the product approval regulations permitted by the respective regulations can be offered through the Insurance Self-Network Platform.

Sharad Mathur, senior vice-president and national head-agency, digital and alternate channel, SBI General Insurance, said this move would help increase insurance penetration.

"We will be able to sell products in rural areas without having a physical presence. Now that we have regulatory support for this initiative, more customers will be motivated to buy online. For us, the operating expenses will come down since products can be sold online," he added.

The process will now be fully online. IRDAI said that a proposal form for insurance business transacted on the Insurance Self-Network Platform will not carry wet/ physical signature. Instead an electronic signature or digital signature or single factor authentication such as One Time Password, PAN Card & Date of birth authentication may be used for underwriting and acceptance of risk for insurance business transacted on the Insurance Self-Network Platform. Till now, even if products were brought online, a physical form was needed to be signed.

M Ravichandran, President-Insurance of Tata AIG General Insurance, said the proposed norms for selling and servicing of insurance policies through the e-commerce platform would facilitate ease of entry for distributors to get onto digital platforms. However, he also added that many insurance companies would need to invest in solutions which clearly allow on-the-go integrations (simple APIs) for partners. This platform would require a technology partner or in-house tech capability, which is not a known strength for traditional distributors.

IRDAI has said that products shall be sold in electronic form which would be through electronic insurance accounts that would have to be opened by customers mandatorily. Ravichandran said that from a customer's point of view, this process is very tedious as they will have to compulsorily have an e-insurance account to buy insurance through this channel. But he said that overall, if companies are able to execute this process appropriately and invest in acquisition efforts, this platform will give companies a huge edge over the competition in the long run.

Sanjay Tripathy, senior executive vice-president of marketing, analytics, digital and e-commerce at HDFC Life said, this would go a long way in preventing frauds and eventually bringing down the cost of insurance in the long run.

It is not just insurers who can set up this platform. Even insurance intermediaries like brokers and also agents can set up the Insurance Self-Network Platform. But those used by an insurance agent would be treated as that of an Insurer and the insurer would be responsible for complying with the requirements spelt out in the regulations. Here, a product sold through the Insurance Self Network Platform (Set up agents/brokers) would also be entitled to commission or remuneration.