Insurance Regulator Issues Draft Guidelines For Dematerialisation Of Policies

India's insurance regulator has proposed draft guidelines for dematerialisation of all insurance policies.

BQ Prime had earlier reported that the Insurance Regulatory and Development Authority of India was looking to mandated electronic format of all new policies issued from December this year, and is proposing a December 2023 deadline for converting older and existing policies.

According to the Sept. 29 draft, the proposed revisions pertain to:

• Solicitation and servicing of insurance business through electronic platform.

• Issuance of e-insurance policies for all modes of solicitation.

• Mandatory use of electronic insurance account for holding e-insurance policies.

The regulator has proposed that insurers shall offer discounts on premium rates for policies purchased directly through the electronic platform, in accordance with the discount rates specified by the authority or under 'file and use' guidelines.

All existing policies shall be issued to the insurance repositories within 12 months from the effective date of this regulation, according to the draft.

The IRDAI has invited comments on the proposed regulations on or before Oct. 20.

Only E-Insurance Policies

Insurance policies can be purchased by either submitting a physical proposal form or through an electronic platform where e-proposal forms are electronically filled and consent is obtained.

However, all new proposals procured directly or through the insurance intermediary will be allowed only through the electronic platform. The IRDAI has proposed that the insurer must establish systems to convert physical proposals into an electronic form.

The e-proposal form would be valid when signed digitally or via Aadhaar-based OTP or by audio or video verification.

If obtained by agents or intermediaries, it should be authenticated by their digital or electronic signature.

The draft said an electronic insurance account will be mandatory for every policyholder, and all policies shall be held in an e-insurance account, which will be unique to each customer.

The policyholder can opt for any one of the registered insurance repositories.

The insurer will create the eIA and shall be responsible for educating the customer with regards to the same.

What Will E-Insurance Help With?

• Automatic capturing of prospect's information and collection of premium directly into the bank account of the insurer.

• Completion of the underwriting of the proposal for insurance.

• Issuance of the e-insurance policy document.

• Periodic forwarding of auto-generated renewal notice to the policyholder, indicating the renewal date and the applicable grace period, if any.

• Collection of renewal premium directly into the bank account of the insurer through online-recognised payment gateways of the insurer.

• Subsequent policy servicing requirements, if any.

• Claims servicing through electronic mode. The insurer shall obtain details from the insurance repository of the electronic insurance policy maintained in the policyholder's eIA and process the claim.