Mixed Response to IRDA Proposal for Online Insurance Products

All stakeholders are not on the same page in terms of response to the recently proposed guidelines by the Insurance Regulatory and Development Authority of India (IRDA) on selling and servicing of non-life insurance policies through e-commerce platforms.

National Insurance Company CMD K Sanath Kumar said even though the new guidelines bring in regulatory clarity, it has a truncated focus on prices and not on services. The new guidelines allow insurance intermediates to provide aggregated advisory services and insurance products through online platforms. Kumar said the servicing of insurance policies, particularly settlements, should also be a critical factor in deciding on a policy. “We will give our input to the IRDA on the issue,” he said.

Financial market intermediary Bajaj Capital, however, was enthusiastic about the new guidelines. Anil Chopra, Group CEO and Director, Bajaj Capital, said his company was creating an online platform and a mobile application at a cost of around Rs. 3 crore. “The insurance module of the platform and the app would be ready by October,” he said.

He said the guidelines have done away with any kind of physical intervention for a transaction. “A one-time password makes it strictly digital.” Earlier this month, the IRDAI had invited comments on the draft guidelines on selling and servicing insurance policies through e-commerce platforms, before notifying the final regulation.

Accessibility
 

“This will go a long way in penetration of insurance products. It is a great effort and will induce a lot of benefits in terms of accessibility of products for customers of smaller towns, who are not encouraged by agents and advisors due to lack of adequate remuneration for them,” Chopra added. Chopra said the country’s total number of non-life issued polices was just 12.5 crore and the coverage of population was low as this number included multiple policies by a single person. IRDAI has also relaxed norms for aggregators who also run online insurance sales channels and has allowed them to issue policies with an assured sum of up to Rs. 1.5 lakh, from the current Rs. 50,000.