he insurance industry is all set to witness a
digital revolution soon. Come October 1, 2016, insurance policies will be
issued in electronic form. It is similar to buying shares online, after which
they are stored in demat form. Most policies, including all motor insurance
and overseas travel insurance policies, will only be purchasable in demat
form. Therefore, you will need an e-Insurance Account (eIA) to buy or renew
most policies from October 2016.
As of now, insurance repositories are in place
for existing physical policy documents to be converted into demat form, but
October onwards issuance of policies will also be in demat form. The
Insurance Regulatory and Development Authority of India (Issuance of e-
Insurance Policies) Regulations, 2016 lays down the guidelines for the
working of digital insurance policies.
The benefits of e-insurance to a policyholder
could be similar to what demat accounts brought to investments in securities,
including stocks, bonds. From filling up the application form to making
payments online to the issuance of the policy document, the entire process
could soon be paperless.
Just imagine not having to apply for a
duplicate policy document, which entails a lengthy process, including filing
an FIR and preparing indemnity bonds. Now maintaining and managing policy
documents, records across multiple companies will also be done away
"More importantly, customers will no longer be
vulnerable to being cheated by fraudsters fabricating and forging policies
since digital policies will be authentic," says Easwara Narayanan, Chief
Operating Officer, Future Generali India Insurance.
A single-view platform should certainly improve
policyholder experience over time. But it seems the response hasn't been
encouraging so far. SV Ramanan, CEO, CAMS Repository Services, informs,
"Response to the e-insurance account has been lukewarm so far. The reason
being it's still not well known in the market. The policyholder trusts the
recommendation of the sales person or the insurer, and this hasn't been their
priority at the moment."
All the stakeholders, including repositories
and insurance companies, therefore, need to create some sort of awareness.
Anil Chopra, Group CEO & Director, Bajaj Capital, says, "Acceptability and
usage of e-Insurance Account is a big challenge from both the categories. The
non-awareness about this facility and not promoting of eIA from insurance
companies is a big hindrance. Hence response is low in both the
So if a policy renewal is coming up, especially
if it involves car insurance, then make sure you already have an e-account.
Ramanan says, "All motor policies are new policies with new policy numbers at
the time of renewals. So this new regulation would cover all renewals as
well. The e-Insurance Account opening would be facilitated by the insurer and
policyholders won't be inconvenienced."
Based on the sum assured and premium amount,
the regulator (IRDAI) has prepared a grid for compulsory issuance of
insurance policies in the electronic form. It, more or less, brings all
policies into the electronic mode. (See table below)
The regulator has already mandated issuance of
e-Insurance policies in disaster-prone and other vulnerable areas. Mohit
Rochlani, Director of Operations and Claims, IndiaFirst Life Insurance says,
"As long as there is connectivity and customer is technology-savvy in these
areas, it would be feasible to issue electronic policies."
Location may not be a constraint anymore and
with technology, servicing could be easier. "Considering the physical
limitations which disaster prone and vulnerable areas may have, issuing
electronic policies from a suitable location and having them deposited into
eIA will be a sensible option." says Narayanan of Future Generali India
As of now, the insurer issues a physical copy
of the document to the policyholder. The document is a policy contract
between the insurer and the policyholder and has a legal standing. Most
insurers, however, have already starting sending a soft copy in addition to
To do away with the physical nature of
documents, one will have to open an eIA with any insurance repository to hold
the insurance policies in an electronic form. There are five registered
insurance repositories in the country, including Karvy Insurance Repository,
Central Insurance Repository, CAMS Repository Service, NSDL Database
Management and SHCIL Projects.
Rochlani says, "Since the majority of the
insurance companies have already made tie-ups with insurance repositories so
issuing of electronic insurance policies should not be a major challenge in
terms of the timelines as per the regulations although there have been a few
clarifications sought by the industry through life insurance council on these
The opening of an eIA may, however, have its
own challenges. The buyers of new insurance policies would require an eIA and
even the existing policyholders can opt to open an eIA account to hold their
policies in the digital form.
The services of the insurance agent can come
handy for it. Nilesh Parmar, COO, Edelweiss Tokio Life, says, "In the
immediate term, we do see some disruption on account of mandatory issuance of
e-insurance policies for all online customers. Convincing customers of the
need to open an eIA account and the actual process of opening this account
for the vast majority of customers who don't have this account could lead to
Instead of filling physical forms, one will be
required to fill up an e-proposal form. As far as the digital reach is
concerned, there are still large areas of the country where this may not be
possible. "Extension of this to small cities and villages and to the
policyholders who are not Internet-savvy is challenging," says Chopra. In
that case, the physical version of e-proposal form will be required to be
filled up and then the insurer will have to convert the furnished information
into electronic version.
"Companies may have to organise digital
signatures, apart from initiating arrangements with repositories for opening
electronic insurance accounts. These are not major challenges," says
The emergence of digital platform in insurance
will bring about not only safety and convenience but also a reduction in
premium. Regulations allow discounts to be offered, and how it changes the
scenario in the insurance industry in future remains to be seen.