IRDA is working to put life policies in electronic form.
April 2012 is the deadline for insuance companies to start issuing insurance policies in electronic form.
To meet this deadline, "Stock Holding Corporation, Central Depository Services Ltd, NSDL, Karvy Computers and Computer Age Management Services are working with the insures and the regulator to put in place the procedure and iron out any possible issues that may arise in the process," Sohanlal Kadel, president, Insurance Brokers Association of India said in Kolkata on Friday.
The rollout plan is as under: -
In the first phase, Life Insurance Policies will be issued electronically. This is because, most of the terms and conditions of life insurance policies are similar making it easier for all the players to adopt dematerialisation for such policies.
The next phase will be for general insurance policies/motor policies and health covers.
The major challenge would be in introducing dematerialisation for general insurance covers.
Majority of large General insurance covers are tailor-mode with the terms and conditions varying for each client. Hence, a large number of permutations and combinations have to be incorporated into the demat system, which might delay the introduction of e-insurance policies for large general insurance covers.
The relevant guideline by IRDA on introducing e-insurance was floated by IRDA in early 2010.
IRDA’s Guidelines in a nutshell for issuing policies electronically: -
The Insurance Regulatory and Development Authority (IRDA) have laid down guidelines for issuing policies electronically which should reduce transaction costs and ensure swift modifications in policies. They even issued the guidelines for repositories, which compile and store data about policyholders on behalf of the insurance companies.
The IRDA said, “The objective of creating an insurance repository is to provide policyholders a facility to keep insurance policies in an electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy. All such insurance policies in electronic form shall be treated as valid insurance contracts”.
According to the guidelines insurers issuing e-insurance policies shall have to take the services of a registered repository. A certified insurance repository has to have a net worth of at least Rs 25 crore, without any foreign investment, and wherein no insurance company can hold over 10% or hold any managerial position.
“The insurance repository before commencing the operations shall put in place measures to safeguard the privacy of the data maintained and adequate systems to prevent manipulation of records and transactions,” the IRDA said..
As a safe ePayments motivator, I believe that this change in issuance of insurance policies will not only benefit insurance players but also aid in increasing value for ePayments.
As sensitive information is part of the Insurance policies, the insurance companies and the insurance repositories must develop adequate security policies to,
01) ensure that no personal information is leaked.
02) the computer network is not hacked
03) ensure that employees are aware of the distinction of ‘private information’ and ‘need-to-know’, information
