From October 1, insurance companies will be required to offer electronic policies as an option to customers. According to the new Insurance Regulatory and Development Authority norms, motor and travel insurance policies will be issued only as e-Policies. FeMoney spoke to Shivakumar Shankar, Managing Director, LexisNexis Risk Solutions India, to get his views on how the change will impact the insurance industry and consumers. Here are excerpts:
Q. How according to you will the October 1 shift to e-policies impact the insurance industry?
A. The move by the Insurance Regulatory and Development Authority (IRDA) to shift to e-policies is commendable for all parties involved as it will help hasten the process of making insurance paperless, in keeping with the technological advancements other business segments are undergoing.
The adoption by insurers can help reduce paperwork in the long run,improve convenience and turnaround times for customers during the time of application and claims. In the long run, the repository for e-policies, would also help insurers reduce their servicing cost thus positively impacting their bottom lines.
Q. In what way would consumers benefit from the shift?
A. According to a recent report by Nasscom (The National Association of Software & Services Companies, India is expected to have 730 million internet users by 2020, with 75 per cent of new user growth expected to come from rural area. Hence the move towards e-policies is in keeping with people’s preferences. E-policies will help bridge the gap between policyholders and their insurers.
The e-Policy option would help the consumers in making future purchases or renewal an easy process and at the same time give them an easier access to their policy when needed. This would bring in greater servicing efficiency and convenience. For example, servicing requests like “change of address” can be made one time with the repository and will take effect on all policies stored in the electronic account.
The new system will bring about more transparency and efficiency in processes, creating greater trust than ever before between customers and insurance companies.
Q. Do you think the move will have an impact on premium rates?
A. Insurers are allowed to give a discount as approved in IRDAI product filing, on the premium for such e-policies, due to anticipated lower cost of servicing. However, at a broader level, the premium is based on the perception of risk and this does not change much. Hence, the impact on premium rates is marginal, if at all.
Q. Is the industry and your company prepared with the necessary infrastructure to issue e-policies?
A. The industry is definitely gearing itself to cater to the Oct 1 deadline. Most insurers have the necessary infrastructure and contracts in place with the approved repositories and this should not be an issue for meeting the timelines. At LexisNexis Risk Solutions, we help the insurer mitigate risks by leveraging industry and third party data to enable them make informed decisions on accepting a risk or settling a claim. Our technology platform is capable of adapting to the e-Policy environment.