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IRDAI may make online insurance distribution mandatory beyond a threshold

Insurance regulator Irdai today came out with a proposal to make it mandatory for insurers to issue electronic policies if the sum insured exceeds a specified threshold for life, health and general products.

According to the draft proposal, electronic insurance would be mandatory if the sum insured for term life insurance and general insurance policy is Rs 10 lakh or more, and in case of health Rs 5 lakh or above. For policies other than pure term, the threshold is Rs 1 lakh or Rs 10,000 single annual premium.

The draft, on which comments have been sought by Irdai till February 26, also proposes mandatory issuance of electronic policy for motor insurance and individual travel insurance (overseas).

Under the amended Insurance Act, the insurers have the responsibility of issuing electronic policies above the threshold fixed by the Irdai.

In view of the mandate under the Act, the regulator has proposed Irdai’s (Issuance of electronic insurance policy) Regulations, 2016 mandating electronic insurance policies beyond stipulated sum insured or premium limit.

“Every insurer shall issue in electronic form insurance policies that fulfil the criteria … in terms of sum assured or premium. Electronic policies may be issued by the insurers either directly to the policyholders or through the registered Insurance Repositories,” the draft said.

It further said that policies issued in electronic form should be deemed compliant only with digital signature.

“Only such policies shall qualify as e-insurance policies,” Irdai has proposed.

The policyholders who wish to avail the facility of electronic insurance policy could do so by registering their choice with the insurer. There would be charges for the conversion.

Regarding discount on electronic insurance policies, the draft said an insurer could offer discount in the premium rates “in accordance with the rates filed under the Product Approval guidelines”.

Creation of an e-proposal form similar to the physical proposal form has also been proposed.

Further, every insurer would mandatorily issue e-insurance policies in disaster prone and vulnerable areas.

Based on the information provided in the proposal form, the insurers may either accept or reject the proposal.

In case the proposal is rejected the insurers would have to communicate that to the prospect through e-mail.

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