Complete digitization means that the customer fills the form online, makes payment and receives a policy copy without having to exit the browser
Abhishek Bondia
A while ago, we were having a team discussion to understand customer pain-points while digitizing the buying process for an insurance product. One of the participants suggested that we scan the filled hard copy of the proposal form, and save in our system. This will make the digitization process complete since all documents will be accessible online. I cringed then because maintaining soft copies falls far short of true digitization. However, this incident does describe the inadequate state of technology adoption in insurance and the prevailing mindset. Recent steps taken by the Insurance Regulatory and Development Authority (IRDAI) of allowing life insurers to accept a digital proposal and share policy copies digitally is a step in the right direction towards making the buying process easier for policyholders.
Full-fledged digitisation needed
Complete digitization means that the customer fills the form online, makes payment and receives a policy copy without having to exit the browser. So, filling a proposal form in a .doc format and then emailing the file is still one step short. Truly digital would mean that the entire information entered by the customer is separately stored in the system. This can then be leveraged later to enhance the customer experience by providing pre-filled renewal forms, providing customized policies, developing unique recommendations, and helping in claims. A word document does not make the filled information easily retrievable. Even basic data sanity checks become cumbersome and error-prone.
IRDAI recently came out with two circulars. The first allowed life insurers to share policy copies over emails or text messages, and exempted them from sharing a policy bond in paper form. A second circular allowed life insurers to accept proposal forms, over electronic means, without wet signatures. Both measures are positive for policyholders. The regulator has built-in several safeguards to keep policyholders’ interest in mind.
Insurers are now exempted from sharing a hard copy of the policy and the filled proposal form. Sending the policy over email has been allowed, subject to the insurer keeping a proof of receipt. The proof could be via calls or other means that verify whether a policyholder received the document. The free-look period for the customer starts from the date of the receipt of the documents.
Extending free-look period
The regulator has further extended the free-look period from 15 to 30 days, thereby reducing the chances of mis-selling, and giving the policyholder a longer window to take corrective action, if required. The process of free-look cancellation has also been simplified. Merely sending a clear direction to cancel will be sufficient. However, the policy copy should be attached as a sign of return. The policyholder need not print a hard copy to cancel the policy during the free-look period or physically visit the branch. To avail this exemption from providing a hard policy copy, an insurer needs explicit consent from the policyholder. In case the policyholder wants a hard copy, the insurer will have to provide this at no extra cost. This exemption is valid for all types of life insurance policies issued up to March 2021.
Filing proposals electronically
Filing of the proposal form has also been made easier. An electronic proposal form can be filled by the policyholder and a confirmation taken via email, or through OTP verification. The insurer is expected to keep the consent for its record. As a safeguard, the insurer has been forbidden from collecting the premium before the proposal form is verified by the applicant. Further, the broker or the intermediary involved has to certify the authenticity of the email ID and mobile number. The intermediaries also have to confirm that only approved sales materials are used. The regulator has been cautious while allowing online acceptance of proposal forms. The exemption is allowed only for term insurance policies and is valid till December 31, 2020. ULIPs and endowment products are kept out of this provision. The regulator has also mandated that grievances be reported separately for all policies where the proposal form has been submitted electronically. A monthly statement of grievances has to be shared with the regulator. The regulator has reserved the right to revoke this exemption for any particular insurer or the industry as a whole.
One of the issues is that all kinds of payment options are feasible for availing exemption under this provision. Even if the payment is made in cheque, a proposal form can be submitted over email and policy copy could be mailed. Generally, people who have access to email are comfortable with online methods of payment. People who are not tech-enabled are unlikely to have an email id. As a result, salespersons may end up using proxies such as personal mail ids, or alternate phone numbers. There are limited ways for insurers to identify the genuineness of an email id or phone number. The regulator though has put the onus on the insurer to authenticate the email id and phone number via de-duplication or other means. The effectiveness of this still needs to be tested. That is why the gradual way in which the implementation has been proposed and the careful monitoring of grievances makes sense.
We are a long way from digitizing the entire customer journey. In buying an air ticket, you can complete the entire transaction in one session. Insurance purchase amounts are similar; however, the buying process is far more complicated. Simplifying the user journey will be key to insurance uptake. The industry is moving in that direction gradually but steadily.
(The writer is Principal Officer & Managing Director, SecureNow )