In a gazette notification dated 13 June, the Insurance Regulatory and Development Authority of India (Irdai) made it mandatory for insurers to issue electronic insurance (or e-insurance) policies if the amount is above a certain ticket size. This will come into effect from 1 October.
When do you get an e-policy?
In the case of life insurance plans, if the annual premium of a policy is at least ₹10,000 or sum assured is ₹1 lakh (₹10 lakh in the case of pure term plans), Irdai has stated that insurers must issue e-insurance policies. In the case of non-life policies, barring health, motor and travel insurance, electronic policies become mandatory if the premium is at least ₹5,000 or sum insured is of ₹10 lakh or more. In the case of health insurance, the premium or sum insured thresholds are ₹10,000 and ₹5 lakh, respectively.
For personal accident and domestic travel insurance policies, this limit is ₹5,000 and above or a sum insured of more than ₹10 lakh.
But for motor and overseas travel insurances, all policies need to be issued electronically. Micro-insurance policies are exempted from this.
These policies can either be issued by the insurer directly and then emailed to you in a PDF format digitally signed by the insurer or through your e-insurance account if you have opened one.
Through the e-insurance account you can hold your policy in a dematerialised form. If the insurer directly sends you the e-policy, it will still have to send the policy documents physically.
But if you get the policy through your demat account, then the insurer doesn't have to send the policy physically. Also, the regulations make it mandatory for insurers to issue policies electronically in disaster prone and vulnerable areas as a precaution against damage to policy document in a catastrophe.
On buying policies online
The regulations state that insurers will have to offer an electronic proposal form to those buying insurance online. This is the practice even now, however, according to industry experts, insurers usually ask for wet signatures for big-ticket policies According to the regulations, a wet signature will not be needed if the policyholder already has an e-insurance account. In cases where the policyholder does not have an e-insurance account, she will need an electronic signature on the e-proposal form. Insurers have sought clarification if a single factor authentication like the one-time password (OTP) can be used for verification as is proposed by the draft guidelines on e-commerce regulations.
Insurers will have to add a provision in the e-proposal form to capture the e-insurance account number. If the policyholder does not have an e-insurance account, the insurer shall facilitate the creation of an e-insurance number wherever the policy is proposed to be issued through the insurance repository system.
Many financial transactions are now being done online; Irdai, too, is taking steps in this direction. Issuance of e-insurance policies regulations encourages holding policies electronically. The draft on e-commerce regulations (read here: http://bit.ly/28RsuFk) makes the entire process of buying insurance online easier.
In arrangement with HT Syndication | MINT
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