In an important move, the Insurance Regulatory and Development Authority (Irda) has give the green signal to the electronic issuance of both life and non-life insurance policies. Simply put, this will allow you to store all your policies electronically under one virtual roof.
Apart from the convenience of monitoring all your policies from one location, you will not be required to do your KYC (know-your-client) rigmarole every time you buy a policy. For the insurers, it will mean a cost advantage since they will save on stationery and printing cost.
The insurance regulator has initiated the process by calling for applications to create insurance repositories, independent licensed entities that will not only enable issuance of online policies, but also work like the data hub for electronic policies.
The repositories will be linked to all insurance companies and will maintain records, such as e-insurance accounts with a unique number, records of e-insurance policies issued and records of e-insurance policies reconverted into physical form, assignment of electronic insurance policies, history of claims data and an index of policyholders and their nominees, assignees and beneficiaries in respective life insurance policies.
To keep your policies in electronic form, you will have to create an e-insurance account with an insurance repository. The e-insurance account will be able to hold all your policies in electronic form.
However, the insurers are not clear how existing policyholders can demat their policies. Says G.V. Nageswara Rao, managing director and CEO, IDBI Federal Life Insurance Co. Ltd: “The guidelines don’t specify how existing customers can make their policies electronic. However, there should be a provision to enable the existing customers, too, to demat their policies.”
At the time of creating the account, you will be required to go through the KYC process and provide relevant information such as address, identity and age proofs. This will be a one-time exercise; since insurers providing e-insurance policies will utilize the services of an insurance repository, they will not need a KYC again.
You would be able to open an e-insurance account at no extra cost.
Since insurers will be able to save on expenses, the cost advantage may be passed on to you. However, it’s too early to say that. Says Rao: “It is too early to say if costs will come down. Even as customers don’t have to pay for an e-insurance account, insurers will have to pay a fee to these repositories. Depending upon the fee structure we will be able to assess if the expenses really come down.”
Not the same as online buying
Having your policy in electronic form is not the same as buying your policy online. Apart from term plans that insurers have begun offering online, other policies are mostly sold offline.
In case you are buying a policy offline, the agent will visit you and make you sign the proposal form and take details of your e-insurance account number. The policy will then be directly sent to your e-insurance account. For online policies, too, the insurer will send the document electronically to your e-insurance account. However, offline underwriting processes such as medical tests will remain.
Says K.G. Krishnamoorthy Rao, managing director and CEO, Future Generali India Insurance Co. Ltd: “The option to store policies electronically will give a boost to the sale of online policies, which will bring the costs down further. However, for intimation of claims or surrender, customers still need to approach the insurer directly.”
Irda’s move may cut the paper clutter from your life.