2020 Quick Recap- IRDAI Regulations That Changed the Face of Term Insurance Amidst the Global Pandemic

After a year of tragedies, deaths and trials, we have finally entered 2021. Last year has surely been the year of persistent grief and suffering and the global pandemic still rages on.

The COVID-19 is one crisis that needs to be addressed by each one of us together as we are all in it together. Each one of us is hopeful that 2021 will be the year of healing from the impact of the novel coronavirus.

However, the global pandemic has reinforced the need for better digital services across the globe. Since the time the pandemic has been around, almost every industry has taken the digital route as it is simple, quick and convenient. The Indian insurance industry is no exception and IRDAI surely has left no stone unturned to provide both convenient and secured digital services to the customers. Undoubtedly, the digital transformation has surely been for good and should be continued even when the world is pandemic-free and we are back to the ‘USUAL NORMAL’.

The time to time interventions the IRDAI surely made the year 2020 a transformative one for the insurance sector. The changes by the IRDAI have given the customers a seamless experience. In this article, let us understand the IRDAIs’ key regulatory changes, which has changed the Indian insurance industry.

Demise Due to COVID-19 Under the Term Insurance Plan

When the COVID-19 pandemic initially hit India, a lot of confusion was around the policyholders of the term insurance plan. The first thing they wanted to know was whether or not the term plan will cover death due to the coronavirus. IRDAI gave a rest to the confusion and came out openly stating that the death due to the coronavirus will be covered with the prevailing term life insurance cover. This implies that if the insured individual passes away due to any complications related to COVID-19, then the death benefit will be then paid to the dependents or the nominee after the insurance claim has been duly filed. This step cleared the fog that was also around the death claim settlement in regards to the pandemic. The directions by the IRDAI provided relief to the policy buyers and the policyholder. It is now clear that the term insurance companies cannot reject the claim that is related to COVID-19 and settle it with no hiccups as per the regulator directives.

The e-KYC

In the times of COVID-19, the IRDAI also gave a green light to the insurance companies to use the Aadhaar-based authentication services and duly complete the process of Know Your Customer. This move is also seen as the commencement of paperless KYC for the customers even when the pandemic comes to an end. Now, with digital KYC in place, the policy buyers need not visit the office of the insurance company and get into the tedious process of onboarding. Besides, the new KYC process will also save time and also enhance the experience of the customers that will be convenient for both the policy buyers and the insurers.

Term Insurance Issuance via Telemedical

The IRDAI duly understood that people are not stepping out of their homes due to the fear of contracting with the deadly virus. Therefore, it permitted the insurance of term insurance plans via telemedical. Before, the individuals who intent to buy the term insurance policy had to visit the medical test to undergo physical test mandatorily.

Now that the telemedical is in place, the policy buyers need not visit the medical centre and the medical screening is easily done over the video call. In regards to life insurance, the cover of up to Rs 2 crore sum assured can be easily bought via telemedical. The customers are expected to provide all the correct information to the respective doctor over the call so that no challenge is faced during the process of claim settlement. The process of telemedical is regulated by the IRDAI and from the perspective of a customer, it is surely reliable.

Digital Policy Documents

In the times we are living currently, the safety of the policy buyers is of extreme importance. Therefore, the IRDAI has permitted the insurers to issue the policy document over an email. In case the policyholder requires the policy document in a physical form then the document needs to be issued by the insurers and no extra charges is levied. The policy documents will be secured and also improve the transparency between the insurers and customers.

The Standard Term Plan

To bring more people within the safety net of insurance the IRDAI has asked the insurers to offer a standard product. The introduction of Saral Jeevan Bima is expected to reduce the hassle for the first time buyers. The Standard Term Plan is designed for people from every section of society. The Saral Jeevan Bima will likewise be issued to the customers easily regardless of any restrictions on gender, age, income and location. The customer can easily choose a sum assured as per the premium payment capacity. The plan will be easily accessible to customers across different digital channels. In case the customer buys the Saral Jeevan Bima online, then an extra discount of 20% can be availed. This policy is going to be the game changer and indeed the remarkable move by the IRDAI to bring in more people within the net of life insurance.

Term Insurance Plan With the One Time Password

The COVID-19 has also drastically affected the face-to-face buying of insurance policies. The IRDAI directed the insurers' to make this process easy and digital for the buyers.

As per the new directive, the new buyer can authenticate the subtleties with the one-time password verification. The authentication will be carried with the help of the link that is sent by the insurers to the customers. The authentication through OTP will be the replacement for the wet signatures. The change will permit the insurers to send the entire proposal form on the mobile number or email of the buyer. The buyer of the policy simply needs to click on the link of confirmation and validate the OTP shared. This has reduced the hassles involved in buying the policy and expedite the process as well.

The Bottom Line

The developments introduced by the IRDAI in 2020 have surely changed the complete landscape of the Indian insurance industry for a better future. Undoubtedly, the announcements have benefit the customers and have made the process easy for the insurers.