The Insurance Regulator and Development Authority of India (IRDA) has mandated that all insurance companies must offer the option of electronic policies from October 1, with motor and travel insurance policies to be mandatorily issued as e-Policies.
The Insurance Regulator and Development Authority of India (IRDA) has mandated that all insurance companies must offer the option of electronic policies from October 1, with motor and travel insurance policies to be mandatorily issued as e-Policies. The new norms would mean a major shift for the insurance industry and its consumers. In the first in a series of interviews on the move with insurance experts, FeMoney brings to you the views of Yashish Dahiya – CEO& Co-founder, Policybazaar.com on what the shift over means to the stakeholders of the insurance industry.
Q. What do you thing will be the impact of the October 1 shift to e-policies on the insurance industry?
A. Currently, consumers have a choice – to get the copy of the policy in soft or hard form. Digital insurance is merely 3% of the overall market. If the idea is to go digital, this initiative should have been mandatorily enforced or in a staggered way, say starting with a category of insurance – life, then health, then motor etc. Overall, the fulcrum in the favor of consumer, but right now, it’s an either/or option, which makes the situation a little complicated. It’s not leading to a complete paperless situation.
Q. How will the move benefit consumers from the shift? Should consumers prefer the e-policy option?
A. The online insurance segment is already benefiting the consumers by giving them an array of options to choose from. E-policies will only be an extension of the many benefits that online insurance offers. For starters, e-policies will be easy to store and would take away the hassles of all the paperwork, which makes the entire process of buying insurance easier. Moreover, the claims process will be linked. It helps making the process more efficient. For insurers, logistics and management cost gets reduced, that in turn would be passed on to consumers in the form of lower premium rates.
Q. Do you think the move will have an impact on premium rates?
A. With the launch of e-policies, we expect insurance companies becoming more cost-efficient in their logistics, especially in their distribution network. Insurers are expected to transfer the benefits of this cost-efficiency to their end consumers, thus making the insurance products cheaper over a period of time.
Q. Do you think the industry is geared up for the change?
A. The industry is far from ready. Currently, very few companies have their process streamlined and linked to insurance repositories to issue e-policies. They are waiting for clarity on the exposure draft on how signing of these policies will be done. Also, there are concerns by the insurers on how repositories would safely store and protect customer data – there is a potential business leak hazard risk involved.