IRDAI allows insurers to issue policy electronically – here is why it is a great move
In a recent move, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed life insurers to issue policy electronically. Looking at the present situation, when the printing and dispatching the policy documents have become difficult, the step towards issue policy electronically comes as a beneficial step for both the insurer and insured even in the long run after the pandemic.
Amidst the sudden occurrence of COVID-19 in the country, almost all business sectors have been disrupted. And thus, the IRDAI has decided to take this significant step to help the life insurers in India and the insured persons with the ease of issuance of the insurance policy documents to the policyholders in digital format. Announcing the initiative, the insurance regulator has issued a circular which exempts the life insurance providers from issuing the hard copy for the policy document and a copy of proposal form, subject to specific conditions.
The IRDAI circular notified that – “In the wake of the current outbreak of Covid19 Global Pandemic and taking into account (i) the feedback received from the Life Insurers expressing difficulties in printing and dispatch of policy documents and (ii) the desirability of adopting digital means of doing business in the interests of policyholders and other stakeholders, the exemption is allowed by Competent Authority, from the requirement to issue policy document, copy of proposal form in physical form.”
According to the website of IRDAI, the exemption of issuing policies in digital format instead of physical copy will be valid for all the policies issued during FY 2020-21. However, the exemption is subject to the following set of guidelines:
- a) Life Insurer confirming the date of receipt of electronic policy document by the policyholder through PIVC or other means and preserving the proof so that Free Look period may be calculated from that date.
- b) Thirty days Free Look period may be allowed for all such electronic policy documents.
- c) Return of electronic policy document by mail by the policyholder with a clear intention of cancellation of the policy will be valid for Free Look Cancellation.
- d) Express consent of the policyholder to receive electronic policy bond is required. If a policyholder insists on hard copy, the same has to be issued without any charges.
- e) The policy document is to be sent to the email id submitted by the proposer.
And in case the policy applicant has not made any claim during the free look period, then the insured person will be eligible for — (a) The refund of the premium paid less than any costs sustained by the insurer for the medical tests of the policyholders and the stamp duty charges or; (b) Where the risk has already begun, and the policyholder has practiced the option of the return of the policy, in such case a deduction towards the proportionate risk premium for the period on the insurance cover or; (c) Where just a part of the insurance coverage has started, such proportionate premium compared with the coverage during such period; (d) In regard of unit lined policy, and in addition to the above reasonings, the insurance provider will likewise be qualified for repurchase the unit at the cost of the units as on the date of the return of the policy.
Moreover, the insurance providers are required to get the policyholder’s consent to receive the policy documents electronically. But if the insured person insists for a physical copy, then the same needs to be issued without any charge. Meanwhile, IRDAI also allowed life insurers in India to submit file quarterly investment returns electronically.
Overall, allowing life insurers in India to issue policy electronically is an excellent move by IRDAI. The apex body has made things easier for both the insurer and insured in this challenging time. BimaKaro.in hails this move as it will provide the insurer with a hassle-free service while saving cost as well. Also, most people nowadays prefer to keep their documents either on email or on their drives rather than keeping hard copies as digital formats are more convenient.