E – INSURANCE POLICIES – AN OVERVIEW & CONDITIONAL EXEMPTIONS IN COVID -19 PANDEMIC

E – INSURANCE POLICIES – AN OVERVIEW & CONDITIONAL EXEMPTIONS IN COVID -19 PANDEMIC

Executive Summary:

• • • The Insurance Regulatory and Development Authority of India (IRDAI), is a regulatory body, constituted under Insurance Regulatory and Development Authority Act, 1999, by the Ministry of Finance, Government of India and is primarily tasked with regulating and promoting the insurance and re-insurance industries in India. With the changing trends towards e-commerce, IRDAI’s now have additional responsibility of regulating and promoting e-commerce in insurance and re-insurance industries in India.
    • Section 2 (vii) of – IRDA (Issuance of e-Insurance Policies) Regulations, 2016 – defines “e-insurance policy” or “electronic insurance policy” as a policy document which is an evidence of insurance contract issued by an insurer and digitally signed in accordance with the applicable provisions.
    • In the wake of Covid-19 global pandemic, the IRDAI based on the representations received from insurers expressing difficulties in printing and dispatch of policy documents and the desirability of adopting digital means of doing business in the interests of policyholders and other stakeholders, under provisions 4 of IRDAI (Issuance of e-Insurance Policies) Regulations, 2016, issued various circulars granting conditional exemptions for issuance of physical forms of insurance policies.

Introduction:

In recent years, we have been experiencing that the concept of digital economy is evolving all the time because of its multifaceted and dynamic nature and also due to the transformational power of digital technologies. Digital technologies have proven to be transformational for development generating economic and social benefits for people, businesses and governments thereby calling for changes to existing policies and adoption of new policies in many areas. Digitalization has more impact on our economy through growth in e-commerce. Thus, taking into consideration the vigorous competition of e-commerce growth, the Government of India has also been creating platforms of digital technology/e-commerce for growing markets. As more and more companies and consumers go online to find the products they are looking for, sellers need increasingly to have a presence on the internet. Otherwise they become invisible in the market.

The Government of India has vide its various laws, created statutory bodies for regulating market sectors in different areas, one of which being Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI, is a regulatory body, constituted under Insurance Regulatory and Development Authority Act, 1999, by Ministry of Finance, and is primarily tasked with regulating and promoting the insurance and re-insurance industries in India and also regulates and promotes e-commerce in insurance and re-insurance industries in India.

Concept of E- Insurance Policy:

In the year 2016, IRDAI, in consultation with the Insurance Advisory Committee, enacted the IRDAI (Issuance of e-Insurance Policies) Regulations, 2016, for issuance of electronic policy and submission of electronic proposal form of insurance policies and introduced concept of “e-insurance policy”.

Section 2 (vii) of – IRDA (Issuance of e-Insurance Policies) Regulations, 2016 – defines “e-insurance policy” or “electronic insurance policy” as a policy document which is an evidence of insurance contract issued by an insurer and digitally signed in accordance with the applicable provisions. Such policies are issued by the Insurers either directly to the policyholders or through the registered Insurance Repositories (IRs).

“Insurance Repository” means a company formed and registered under the Companies Act, 1956 (1 of 1956) and which has been granted a certificate of registration by IRDAI for maintaining data of insurance policies in electronic form on behalf of Insurers. The insurance repositories provide the ease of holding insurance policies issued in an electronic form to policyholder vide “e-Insurance Account” or “eIA”, which is an electronic account opened by a person with an insurance repository wherein the portfolios of insurance policies of a policyholder are held in an electronic form.

Regulation 4 of the IRDAI (Issuance of e-Insurance Policies) Regulations, 2016 deals with provisions of issuance of electronic Insurance Policies. It provides that, policies issued in electronic form by the insurer unless issued through registered insurance repositories shall be issued in physical form as well. Further, it also makes mandatory issuance of e-insurance policies in disaster prone and other vulnerable areas.

Benefits of holding e-policies:

• Safety: No risk of loss or damage of a policy. The electronic form ensures that the policies are in safe custody and can be easily accessed. A copy of the policy can be downloaded at any time by accessing the e-insurance account.
• Single point of service: Insurance repository as the single point of service, updating details like change of address or nomination becomes easier, faster and more reliable.
• Single KYC: A customer need not go through the KYC process every time they want to buy a new policy.
• Easy payout transfers: Policy benefits would be paid through electronic facility to the registered bank account, thus ensuring speedier and convenient settlement.

Conditional Exemptions in Covid19 Pandemic: (An Overview):

In the wake of Covid-19 global pandemic, the IRDAI based on the representations received from insurers expressing difficulties in printing and dispatch of policy documents and the desirability of adopting digital means of doing business in the interests of policyholders and other stakeholders, under provision 4 of IRDAI (Issuance of e-Insurance Policies) Regulations, 2016, issued following circulars granting conditional exemptions for issuance of physical forms of insurance policies:
(1) Circular Ref. No: IRDAI/HLT/REG/CIR/235/09/2020, Dated 10/09/2020: (Effective till 31/03/2021)
(2) Circular Ref. No: IRDAI/NL/CIR/MISC/237/09/2020, Dated 10/09/2020 (To All General Insurers): (Effective till 31/03/2021)

• – All Motor Insurance Policies
• – Fire Insurance policies covering dwelling and/or contents thereof issued to individuals
• – All package insurance policies issued to individuals (e.g. packing policies for dwellings)
• – All Miscellaneous policies issued to individuals where the Sum insured does not exceed Rs. 5 Crores.

(3) Circular Ref. No: IRDAI /Life/Cir/Misc/207/08/2020, dated 04/08/2020 (To All Life Insurers) (Effective for Financial Year 2020-21)
(4) Circular Ref. No: IRDAI/Life/Cir/Misc/056/03/2021, dated 23/03/2021 (To All Life Insurer) Extension of Exemption granted under circular dated 04/08/2020. (Extended till 30/09/2021)

Conditions for Exemptions granted under Circular I & II:

• (1) Insurers shall send the policy document and a copy of the proposal form through digital/electronic mode. The documents shall be sent to the registered e-mail id or mobile number provided by the customer only on the specific consent provided by the policy holder.
• (2) Simultaneously the policyholders shall be informed through SMS that policy document /copy of the proposal form have been sent to their e-mail id or any other digital / electronic mode (as may be the case).
• (3) Insurers shall put in place proper mechanism to ensure that the documents are delivered to the designated e-mail Id / mobile number of the policyholder and an acknowledgement is appropriately obtained / auto-collected on delivery.
• (4) When documents are forwarded by electronic means, the record of policyholder having received the document or the electronic platform having delivered the documents shall be maintained systematically. It shall be clearly informed to the policyholder that the date of delivery of the document is reckoned for the purpose of examining free-look requests, wherever applicable.
• (5) Insurers shall preserve the records of such acknowledgements for further reference.
• (6) The policy document sent electronically shall contain all the schedules, terms and conditions, benefits etc. that are otherwise available in the physical document.
• (7) Policyholders shall be also informed that printing of physical policy document and dispatch of the same along with the copy of proposal form may be delayed due to operational difficulties in the wake of ongoing COVID-19 pandemic situation.
• (8) Policyholders shall be informed that the policy document sent electronically is as valid as the physical policy contract / document.
• (9) Wherever policyholders demand the physical version of the policy document /copy of the proposal, the same shall be made available.
• (10) Wherever it is not possible to send the policy documents through electronic means due to any reason, insurers shall necessarily forward the physical documents to the policyholders

Conditions for Exemptions granted under Circular III & IV:

• (1) Life insurer confirming the date of receipt of electronic policy document by the policyholder through peripheral intravenous catheter (PIVC) or other means and preserving the proof so that free look period may be calculated from that date.
• (2) Thirty (30) days free look period may be allowed for all such electronic policy documents.
• (3) Return of electronic policy document by mail by policyholder with clear intention of cancellation of policy shall be valid for free look cancellation.
• (4) 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.
• (5) Policy document shall be sent to the email id submitted by the proposer.

Conclusion:

From the foregoing provisions, the IRDAI is seen to be playing an effective role by issuing time specific guidelines and even in the tough period of COVID 19 pandemic, the issuance of guidelines by IRDAI on e-commerce through digital technology have played a great role to sustain the economic growth of the country in difficult times. The issuance of e- insurance policy will definitely protect the interests of both i.e. the insurers to effectively grow its business as well as the policyholders to acquire more policy benefits during the pandemic situation, thus maintaining a healthy relationship between insurers and policyholders.

Regards,
Legal Team

Proind Business Solutions Private Limited
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