IRDAI publishes draft standards; the insurer must have a fitness-compatible electronic application form

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Dematerialization of insurance contracts: IRDAI publishes draft standards; the insurer must have an electronic application form with a physical form

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

“To promote efficiency in the conduct of insurance business by enabling insurers to establish an appropriate framework by adopting technology to enhance the capabilities: a) of soliciting insurance business through an electronic platform, b ) issuance of online insurance policies purchased either through an electronic or other platform. (c) make mandatory the use of electronic insurance accounts for the holding of electronic insurance policies”, the insurance organization in its Exposure Draft – Indian Regulatory and Development Authority Regulations 2022 insurance (issuance of electronic insurance policies), released on September 29, said.

IRDAI has asked all insurance companies to dematerialize their existing or old policies by the end of December, industry experts said earlier.

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Electronic proposal form

The IRDAI project stipulates that each insurer soliciting insurance business electronically, either directly or through insurance intermediaries, must set up an electronic application form in line with the physical application form, in concerning the requested product.

The electronic proposal form must also include the suitability assessment form and a personalized illustration of the benefits, in accordance with the applicable existing provisions. In addition, the form, submitted by the prospect via the electronic platform, is only valid if it bears the digital signature of the prospect or an authorized electronic signature via an Aadhaar-based one-time password to affirm or confirm the details.

Additionally, the insurance regulator noted that if the prospect does not wish to verify via the one-time password, video or audio verification of the confirmation method can be used.

What must insurers do to issue an electronic/dematerialized insurance policy?

Completion of insurance application underwriting.

Periodic sending of an automatically generated renewal notice to policyholders, indicating the renewal date and the applicable grace period, if applicable.

Collection of the renewal premium directly into the insurer’s bank account via the insurer’s recognized online payment gateways.

Subsequent police service requirements, if any.

Claims management electronically.

What about policyholders?

Discount on electronic insurance policies: An insurer must offer discounts on premium rates to policyholders if they purchase them directly through the electronic platform. Such discount shall be in accordance with the discount rates filed under the respective Files and Use Guidelines or as specified by the Authority.

Existing policies: each insurer must provide the existing insured with the possibility of the electronic insurance policy. All existing policies must be issued to insurance repositories within 12 months of the effective date of this Regulation and notify policyholders in accordance with Regulation 14.

Power of the Authority to issue clarifications, etc. : In order to remove any difficulty in applying or interpreting any of the provisions of these Regulations, the Chairman of the Authority may issue clarifications, instructions and guidelines in the form of circulars/guidelines.

An electronic insurance account (eIA) will be mandatory for each policyholder and all policies issued to the policyholder will be stored in the policyholder’s eIA, the regulator said.

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