IRDAI permits insurers to issue e-policies
You can now get your health, motor and other insurance policies in electronic form by giving your consent to the insurer via a one-time-password (OTP), without using a wet signature on the hard copy of the proposal form.
The Insurance Regulatory and Development Authority of India (IRDAI) has allowed the option of authenticating insurance policy proposals forms through electronic means in place of physical signatures.
IRDAI stated in a circular issued on September 10, 2020, that this exemption will be valid till March 31, 2021.
Why this exemption has been allowed
Due to the coronavirus pandemic, the traditional way of buying insurance policies, that is, in physical form has been impacted. Basically, the filling of the physical proposal forms, getting wet signatures on them and subsequent movement of such physical forms, etc., are getting severely affected.
Gurdeep Singh Batra, Head - Retail Underwriting, Bajaj Allianz General Insurance, said, "Issuing electronic policies, as per the IRDAI’s circular, is definitely a positive step considering the current pandemic situation and the challenges in issuing physical policy documents or proposal forms. This not only improves the turnaround time for policy issuance but also secures the policy documents electronically with the policyholder as well as the insurer. Since all the documents are transacted online and maintained, it also improves transparency between the insurer and insured."
In the backdrop, insurers have represented to IRDAI to allow the option of authenticating the proposals forms insurance policy through electronic means, in place of physical signature.
What IRDAI has stated
The circular issued on September 10 said, "In the wake of Covid-19 pandemic, based on representations received from insurers, the IRDAI, grants exemption to insurers from the requirement of (a) issuing policy document and (b) copy of the proposal in physical form in respect of the following, subject to insurers complying with certain requirements as stated below:
Besides, the regulator has also received representations from the insurers for exemption to all individual/retail health insurance policies issued by general and health insurance companies (the insurers) from the requirement to issue physical policy document and hard copy of proposal form.
The IRDAI states the following rules for insurer with respect to issuance of electronic policies:
- Insurers shall send the policy document and a copy of the proposal form through digital/electronic mode. The documents shall be sent to the registered e-mail id or mobile number provided by the customer only on the specific consent provided by the policyholder.
- Simultaneously the policyholders shall be informed through SMS that policy document /copy of the proposal form have been sent to their e-mail id or any other digital / electronic mode (as may be the case).
- Insurers shall put in place proper mechanism to ensure that the documents are delivered to the designated e-mail Id / mobile number of the policyholder and an acknowledgement is appropriately obtained / auto-collected on delivery.
- When documents are forwarded by electronic means, the record of policyholder having received the document or the electronic platform having delivered the documents shall be maintained systematically. It shall be clearly informed to the policyholder that the date of delivery of the document is reckoned for the purpose of examining free-look requests, wherever applicable.
- Insurers shall preserve the records of such acknowledgements for further reference, as per the circular.
- The policy document sent electronically shall contain all the schedules, terms and conditions, benefits etc that are otherwise available in the physical document.
- Policyholders shall be also informed that printing of physical policy document and dispatch of the same along with the copy of proposal form may be delayed due to operational difficulties in the wake of ongoing COVID-19 pandemic situation.
- Policyholders shall be informed that the policy document sent electronically is as valid as the physical policy contract / document.
- Wherever policyholders demand the physical version of the policy document /copy of the proposal, the same shall be made available.
- Wherever it is not possible to send the policy documents through electronic means due to any reason, insurers shall necessarily forward the physical documents to the policyholders, as per the circular.
Dispensing of wet signature on proposal form
- As per the circular, insurers are allowed to obtain the customer’s consent without requiring wet signature on the hard copy of the proposal form subject to following:
- The completed proposal form shall be sent to the prospect on his/ her registered e-mail ID or mobile number by means of a message with a link, as the case may be.
- If the proposer wishes to give consent to the proposal, the same may be permitted by providing a link for confirmation or through One Time Password (OTP) duly validated.
- Insurers shall maintain verifiable, legally valid evidence for the proposer’s consent received for the fully completed proposal form, as per the circular.