With more and more financial processes being migrated to the web, it was only a matter of time before the insurance industry followed suit. In India, insurance repository services were first launched in 2013. What are insurance repository services? These are services that are made available to the customers of insurance providers who have been certified by the Insurance Regulatory and Development Authority of India (IRDA) as being able to maintain records of policies in electronic format.
These services have not yet been made mandatory by the IRDA, but that is going to change soon. A notification was recently issued on ‘regulations for Issuance of electronic insurance policies and submission of electronic proposal form of insurance policies.’ As per the Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations 2016, the new regulations are going to come into effect on October 1, 2016. It states that electronic insurance is a must for anyone paying annual premium that amounts to or is above Rs. 10,000 in life and non-life insurance policies.
In other words, the new system is going to serve as a much needed upgrade in how insurance policies are issued in India.
An e-Insurance account is an online storage facility where all insurance information can be filed away electronically and an insurance portfolio can be maintained. It comes assigned with a unique 13-digit account number so that duplication can be avoided. In addition, all account holders will also be granted unique login credentials and a password so that they can access their insurance policies online. It should be noted that each policy holder is entitled to one e-Insurance account only.
While it has been stated that insurance providers will facilitate the opening of an electronic insurance account, it is also possible for policy holders to do so themselves.
All the companies listed above provide the option of applying for an insurance account online. According to a leading figure in the insurance industry, "These guidelines recognise the online medium as a platform to sell insurance policies. They also clarify operational issues like using physical signatures in an online sale; the need for physical signatures has been done away with," Instead digital signatures or single factor authentication will become the norm. One-time passwords, PAN numbers and date of birth authentication processes may be used for underwriting purposes.
When going through the procedure, all details need to be filled online after which a physical copy has to be printed and signed by the prospective account holder. This signed form then needs to be submitted at any of the above organizations. Required Know Your Customer protocols of course have to be followed in that first instance which means that proof of identity has to be furnished.
This procedure guarantees that an account will be opened within a week. Following the creation of an account, users are given a welcome kit and a pin mailer is sent separately.
A leader at the CAMS Insurance Repository Services says, "Through this, the entire process will be online, end to end. This will not only save cost for the insurer, but also make the processes more efficient, and offer quick turn-around time to policyholders. Today, the typical turnaround time for issuance is T+2 to T+7, T being the date of signing the application form. Online, this can be done in T+2 hours to T+4 hours."
Every insurance provider actively issuing polices through electronic and online means should create an e-Proposal form that is similar to the physical form that has been approved by the IRDA. The form should be created a way that it is easy for customers to enter their information. It should also enable streamlined servicing and processing.
In addition, and most importantly, the e-Proposal form must be able to capture the account holder’s electronic Insurance Account number properly. Since the prospective customer is issued only one eIA, this number must be entered properly.
Insurance providers also have to ensure that physical versions of the e-Proposal form are made available. If it so happens that there is information in the physical form that has not been captured in the electronic version, then the insurance provider has to ensure that information is entered into the electronic copy.
Furthermore, if it so happens that a customer or prospect does not have an electronic Insurance Account, then the provider has to ensure that they create one for them. When the customer provides all their details, the form will carry their electronic signature.
When creating electronic insurance accounts they have to fulfil certain criteria where premiums or policy sum assured is concerned. For instance, if the sum assured of the policy holder is Rs 10 lakhs or more, or if the annual premium amounts to more than Rs. 10,000, then, as stated above, it is an absolute must to have an eIA account. It is also mandatory to have all information relating to overseas travel insurance for individuals and motor insurance information in electronic format.
Where health insurance is concerned, policies that guarantee a sum assured of Rs. 5 lakhs or more, or the annual premium is more than Rs. 10,000 the policy has to be issued in electronic format.
It should be noted that policies can be issued to customers either directly, that is the provider themselves will furnish a copy, or they can be issued through the registered insurance repositories. In case they are issued directly to the policy holder then a physical copy has to accompany the electronic one. In these cases, the proposal form also has to be sent in physical form. It goes without saying that the physical and electronic copies of all documentation will be identical.
Once electronic insurance procedures become the norm, the traditional risks associated with physical insurance documents will be greatly diminished. Customers can access their documents anytime, anywhere and modify their insurance details easily.
Further, with the insurance industry adopting an e-commerce business model, the IRDA is hoping that the business of insurance itself will become more streamlined and efficient. With the introduction of these new regulations, industry leaders are hoping that insurance will become a “pull product”. Not only will it become more accessible to a greater number of consumers, but in the long run companies can also look to save on overhead costs, and streamline bloated processes.
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