Insist on an e-policy

It has more benefits compared to a physical one; faster claim processing is one

Archana Joshi, 36, realised she had not received a physical copy of an insurance policy she had bought. She paid her premiums regularly, but needed an emergency loan. When the bank asked her for a physical copy, she found she didn’t have one, and she couldn’t manage to get a loan.

Joshi could have avoided this had she asked for an e-policy. These are policies issued online as against a physical copy. Banks accept e-policies for loans against them and the repository will make a remark on the same.

E-policies are bought online. However, a few insurers still send the policy in a hard copy after it has been purchased online. This obviates the utility of buying a policy online. Hence, the Insurance Regulatory and Development Authority (Irda) now allows insurers to partner one or more insurance repositories (NSDL, CAMS, etc) where life insurance policies sold to customers are saved in an electronic form.

Insurers are gearing up and building infrastructure so they can issue all types of life policies in e-format. At present, no deadline has been given to insurers. However, customers will continue to have the option to digitise policies or have those in a physical format.

“Once insurers start issuing e-policies, slippages will reduce and the quality of after-sales service will improve,” says Ashvin Parekh, national leader, global financial services, EY. “The cost incurred by the insurers would drop, leading to a decline in insurance premiums.”

About 20,000 e-policies are sold online monthly, mainly in health, motor and protection (term) products. E-policies help customers to buy a policy without the help of an agent.

“Another benefit of an e-policy is you don’t have to undergo the know-your-customer norms every time you buy an insurance,” says Amitabh Tapadar, chief marketing officer, Tata AIA Life Insurance.

At present, it takes two to three weeks to issue a policy offline, whereas an online one can be issued in a week. E-policies make it easier for insurers to maintain and records. “The issuance of duplicate policies in case policy documents are misplaced would become easier and the customer would have an easy access to the online repository,” says Rajesh Relan, managing director and country head, PNB MetLife India. The e-format would also enable quick retrieval of policies, leading to faster claim processing.

One can also reduce the chances of an insurance policy getting rejected. “Life products sold online today go through the underwriting checks during the buying process itself. Any ambiguity an insurer has about a customer's health is discussed with him and only then he is allowed to buy it online,” says Yashish Dahiya, chief executive, PolicyBazaar.  

Also, since the purchase would be genuine, this would result in people holding their policies for a longer time, with fewer lapsed policies.