Dematerialisation of insurance policies: IRDAI releases draft norms; insurer to have e-proposal form consistent with physical form

New Delhi: The Insurance Regulatory Development Authority of India (IRDAI) on Saturday released draft guidelines on the dematerialisation of new insurance policies and sought comments from all stakeholders by October 20.

“To promote efficiency in the conduct of insurance business by enabling the insurers to establish an appropriate framework by adopting technology to build capabilities: a) for solicitation of insurance business through an electronic platform, b) to issue e-insurance policies procured either through an electronic platform or otherwise. c) to mandate the use of electronic insurance accounts for holding e-insurance policies,” the insurance body in its Exposure Draft - Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations, 2022, issued on September 29, said.

IRDAI has requested all insurance companies to dematerialise their existing or old policies by December end, industry experts had said earlier.

The IRDAI draft states that every insurer soliciting insurance business through electronic mode either directly or through the insurance intermediaries shall have in place an e-proposal form consistent with the physical proposal form, with respect to the product being solicited.

The e-proposal form shall also include the suitability assessment form, and customised benefit illustration, as per the extant provisions applicable. Moreover, the form, submitted by the prospect through the electronic platform, shall be valid only if it carries the digital signature of the prospect or an authorised electronic signature through an Aadhaar-based one-time password to affirm or confirm the details.

Further, the insurance regulator noted that in case the prospect is not willing to verify through the one-time password, either video or audio verification of confirmation method may be used.

Completion of the underwriting of the proposal for insurance.

Periodic forwarding of auto-generated renewal notice to the policyholders, 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.

What’s in it for policyholders?

Discount on electronic insurance policies: An insurer shall offer discounts on the premium rates to the policyholders if purchased directly through the electronic platform. Such discount shall be in accordance with the discount rates filed under the respective File & Use guidelines or as specified by the Authority.

Existing policies: Every insurer shall provide the existing policyholder with the facility of the electronic insurance policy. All the existing policies shall be issued to the Insurance Repositories within 12 months from the effective date of these regulations, and inform policyholders as per Regulation 14.

Power of the Authority to issue clarifications etc.: In order to remove any difficulties in the application or interpretation of any of the provisions of these Regulations, the Chairperson of the Authority may issue clarifications, directions and guidelines in the form of circulars/guidelines.

An electronic insurance account (eIA) shall be mandatory for every policyholder and all policies issued to the policyholder shall be held in the eIA of the policyholder, the regulator said.