The covid-19 pandemic has given the much-needed digitization push across industries. In the insurance sector, the Insurance Regulatory and Development Authority of India (Irdai) has brought in various measures to ensure insurers and policyholders are able to sell, purchase and claim life insurance online as social distancing becomes the new norm. In a bid to encourage easy purchase of offline term insurance plans and to solve the problem of issuing physical policies amid covid-19, Irdai this week brought in a few changes.
We tell you what the changes are what they mean for you.
Buying online term plans is easy, but getting an offline term insurance plan could be tough in these times. “Term plans are simple and easy to understand. This combined with the fact that it’s prudent to take one step at a time could be the reason to restrict the dispensing of physical signatures to only term products," said Rushabh Gandhi, deputy CEO, IndiaFirst Life Insurance Co. Ltd.
In its circular, Irdai said the traditional means of canvassing for life insurance policies, including term plans, by agents and other intermediaries has become difficult in view of the impact of covid-19. Filling of physical proposal forms, obtaining wet or physical signatures on them and the subsequent movement of physical papers has been affected, said the regulator.
The agency model of selling has been face-to-face where the agent would go meet the customer and either the agent or the customer would fill the details in the proposal form, sign it and send it to the insurer for issuing the policy.
“With covid-19, customers are apprehensive about meeting anyone in person. While we could capture the details for the proposal form over a phone or video call, getting the signature has been a challenge," said Anil P.M., head, legal and compliance, Bajaj Allianz Life Insurance Co. Ltd.
To solve this, insurers suggested having a digital system in place to authenticate the details by way of one-time password (OTP) verification or by sending a link to the customer which can be used as a replacement for wet signatures.
Life insurers are now allowed to obtain the customer’s consent without requiring signatures on the hard copy of the proposal forms. Insurers will have to send you the completed proposal form on your registered email ID or mobile number in the form of an email or message link. If you wish to consent to the proposal, you will have to click on the confirmation link to validate the OTP shared with you.
The regulator has asked insurers to maintain verifiable and legally valid evidence for the proposer’s consent received on the fully completed proposal form. “Insurers will need to have a mechanism in place to trigger the OTP or sharing of the link. Irdai wants us to have a mechanism in place for the customer to key in the acknowledgement and for us to store this in case any issue arises in the future," said Anil.
Also, insurers are not allowed to accept any payment towards proposal deposit till the proposer has given her consent. “Generally, customers give a cheque with the completed proposal form which comes to the insurer. Now customers are not required to pay the premium until they’ve accepted or given their consent to the proposal," added Anil. Agents and intermediaries are required to certify the authenticity of email ID and mobile number of the proposer.
Irdai said insurers will be responsible for carrying out pre-issuance verification calls for all such prospects and ensuring the suitability of the product.
Irdai has allowed this on an experimental basis till 31 December. “Most of the term business already happens through online modes. This circular will make a difference for insurers who are selling term through the offline mode. It makes the process simpler for sure and if it works, the regulator may expand the timeline and the scope to other products as well," said Gandhi.
According to Irdai, life insurers have expressed difficulty in the printing and dispatch of policy documents, giving way to adopting digital modes of doing business for all life insurance policies.
Insurers can now email life insurance policy documents. In 2016, Irdai had said that if policies are solicited through an electronic mode, insurers were required to send the policy electronically and also dispatch a hard copy. Exemption for a physical copy was provided only where the policy was issued using an e-insurance account (eIA). “This requirement (of eIA) has been done away with. We can now send the PDF of the policy bond over email. Insurers are not mandated to send the physical policy," said Anil.
Insurers Mint spoke to said they were unable to send the policy contracts on time due to the pandemic. This was resulting in the 15-day free-look period getting extended. A customer can terminate a policy without paying any penalty during the free-look period but it starts only once the customer receives the policy documents.
Further, the free-look period has now been increased to 30 days from the date of receipt of the electronic policy. “This is to give the customer some extra time to go through the policy. Also, customers can now return the policy electronically. They can just write an email instead of returning the contract either in person or through courier," said Gandhi. Insurers shall confirm the date of receipt of the e-policy and preserve the proof so that the free-look period can be calculated from that date.
It is not mandatory for life insurers to send physical policy documents anymore, once they obtain the policyholder’s consent. If a policyholder insists on hard copy, the same will have to be issued without any charges.
This will save them costs. “A digital onboarding process will result in reduction of operational cost of processing the policy and the saved cost can be reinvested in enhancing customer experience," said Gandhi.
This could also remove ambiguity and help insurers and customers connect directly with increased transparency. Insurers said the simplification of the purchase process may encourage more people to buy life insurance.
Anil said this move is the need of the hour as digital is the new normal. “Like everything else, you can now access the insurance bond also through your phone. It gels well."
Also, some policy bonds were returned due to various reasons such as wrong address. The electronic issuance will help solve this problem and policyholders will receive the bond much faster.
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