The proposed stipulation by the Insurance Regulatory and Development Authority (IRDA) for a compulsory e-Insurance accounts to purchase policies through e-commerce platforms of insurers may create hurdles for consumers seeking to purchase insurance online.
Top insurance company officials said the regulator’s stipulation in the draft guideline issued on Tuesday that all policy purchases over e-commerce sites would have to be backed by the creation of an e-insurance account may restrict ease of transaction and act as a deterrent.
“From a customer’s point of view, this process is very tedious as they will have to compulsorily have an e-Insurance Account to buy insurance through this channel,” M Ravichandran, President, Insurance, Tata AIG General Insurance, told FeMoney.
An ‘e-Insurance Account’ is an electronic account similar to demat accounts opened in the equity market. It acts as an insurance repository wherein the portfolios of insurance policies of a policyholder are held in an electronic form. The IRDA had issued guidelines for e-Insurance Accounts in May 2015.
K G Krishnamoorthy Rao, Managing Director and Chief Executive Officer of Future Generali India Insurance, agreed with Ravichandran but feels that things would settle down gradually. “Initially there will be a problem for consumers to open e-Insurance Accounts to purchase insurance online. However, it will be good to eventually move towards dematting of all insurance policies, not just online ones but also those held physically,” Rao said.
Rao said that the differential pricing proposed by the insurance regulator would enable insurance companies to offer policies at cheaper rates than what is sold offline. “Allowing differential pricing will make insruance cheaper when sold online. But this may not happen if the policy is sold through online platform of brokers or aggregators,” Rao said.
Tata AIG’s Ravichandran felt IRDA’s move would help spread insurance. “The proposed norms for selling and servicing of insurance policies through the e-commerce platform is a welcome move for the under-penetrated insurance space in the country. It will facilitate ease of entry for distributors to get onto digital platforms. Companies can benefit by creating a large network of digital touch points, building more transparency and reach for distribution,” Ravichandran said.
In its exposure draft IRDA has said that insurance companies would have to set up their own Insurance Self-Network Platform to undertake Insurance e-commerce activities such as selling and servicing of insurance products.
It proposes that the Insurance Self-Network Platform to be available as regular internet web-site (desktop and mobile) or as a mobile app or both. All products offered on this channel shall has to be pre-fixed with the letter “i-” to distinguish them from regular products.
The regulator has said that pricing of the product shall be decided by the insurer and that the insurer may offer differential pricing when sold through the Insurance Self-Network Platform.