PAPERLESS INSURANCE EXERCISE SUBMISSION

BA0160029
Nourama Sain
12.09.2020

1. The Insurance Regulatory and Development Authority (IRDA) launched the

Insurance Repository System, which allows you to hold your insurance policies in
paperless form. Insurance Regulatory and Development Authority of India (IRDAI)
has in its guidelines on insurance repositories and electronic issuance of insurance
policies, specified that term insurance policies with premium above Rs 10,000 per
annum or sum assured of Rs 10 lakh will need to have e-insurance accounts. In
general insurance, all retail motor policies are required to be available in a digital
format.

Yes, it is allowed and the objective of creating an insurance repository is to provide

policyholders a facility to keep insurance policies in electronic form and to undertake
changes, modifications and revisions in the insurance policy with speed and accuracy.

2. Regulation 4 of IRDA ( Issuance of e- Insurance policies) Regulations, 2016 and

Regulation 18 read with Regulation 8 (1) of IRDAI ( Protection of Policyholders
interests) Regulations, 2017.
In the exercise of powers vested under proviso to Regulation 4 (iii) of IRDAI
Regulations, 2016, grants exemption to insurers from the requirement of (a) issuing
policy document and (b) copy of the proposal in physical form in respect of the
following-
a) All motor insurance policies
b)Fire insurance policies covering dwellings and or contents thereof issued to
individuals
c) All package insurance policies issued to individuals
d) All miscellaneous policies issued to individuals where the sum insured does not
exceed Rs. 5 crore.
3. Section 3 of the IT Act, made the provision for it as: Authentication of electronic
records-
(1) Subject to the provisions of this section, any subscriber may authenticate an
electronic record by affixing his digital signature.
In IT Act, section 4 and 5 are also quite relevant.
Section 4 made the provision for legal recognition of electronic records – where any
law provides that information or any other matter shall be in writing, typewritten or
printed form then not-withstanding anything contained in such law, given requirement
shall be deemed to have been satisfied if such information or matter is-
a) Rendered or made available in an electronic form; and
b) Accessible so as to be usable for a subsequent reference

Section 5 Legal recognition of [electronic signatures] – Where any law provides that
information or any other matter shall be authenticated by affixing the signature or any
document shall be signed or bear the signature of any person, then, notwithstanding
anything contained in such law, such requirement shall be deemed to have been
satisfied, if such information or matter is authenticated by means of [electronic
signature] affixed in such manner as may be prescribed by the Central Government.

4. Benefits of e-insurance
From the customer’s perspective, it will increase convenience. For example , issuance
of duplicate policies in case the policy documents are misplaced becomes easier and
the customers also have an easy access to the online repository. Also, they can now
view all their investments (insurance policies) and manage their portfolio through a
single window.
Claim settlement also will become easier. Policy benefits would be paid through
electronic facility to the registered bank account, thus facilitating a more convenient
settlement. However, policyholders can merely lodge a claim through the e-insurance
account submission of the relevant documents will have to be done offline.
One does not have to preserve a hard copy of their policy document, as you don’t run
the risk of losing them. You can simply download a copy from your account, if
required. Also, you don’t have to go through the KYC process every time you are
buying an insurance product.
 It could also be easier to track policy details such as nominees, maturity amount and
premium or renewal due date, as they will be available at a single location. It will also
maintain a record of claims made or loans taken against the e-policies. “For instance ,
any service request change in address or other KYC-related information can be sent to
the IR and it will get updated across all your policies in the e-insurance account.

Areas of e- Insurance to be concerned about

The e- Insurance offers multiple advantages. But there are some areas of concern
related to it as well. Those are listed below,
• Data Security is a concern for every policy holder.
• Going electronic will make it difficult for rural areas to access it.
• High cost related to the necessary technology and lack of standardization of
some communication protocols - Inadequacy of communication bandwidth
and software difficulties and defects –
• Lack of integration of digital and non-digital selling with production data
(product) - Limitations on accessing communication instruments such as
optical fiber and wireless connection –
• Difficulties in integrating infrastructures of e- commerce with the
organization's current it systems - Security issues and customers’ fears of
presenting personal and confidential information (such as entering username
and password)
• Obstacles related to culture and organizational behaviour and its current
structure

5. The insurance regulator has licensed five entities — NSDL Database Management,
Central Insurance Repository , SHCIL Projects, Karvy Insurance Repository and
CAMS Repository Services — to act as insurance repositories (IRs).

These repositories will facilitate the opening of e-insurance accounts (eIAs), which
will hold all your policies in the electronic form. The policyholder will not have to
pay any fees, as the cost will be borne by the insurers.

At the moment, the facility is available only to individual life insurance policies. But
 in a couple of months, it will be extended to other life insurance and non-life policies
as well. You have three options to open an account: you can approach one of the five
repositories directly, route the request through your insurance company or enlist the
services of an ‘Approved Person’ appointed by the repositories. After the process is
completed, a welcome kit containing your 13-digit account number and your log-in
ID, along with information on operating the account will be dispatched to you. Your
personal identification number (PIN) will be sent separately.

Subsequently, you can start the process of digitising your policies. Here again, you
need to fill up a form. The insurer will then co-ordinate with the repository and the
data transmission and confirmation will take place. .. If you are buying a new
insurance cover, you can opt for an e-policy.

6. As boundaries between businesses are reduced and a greater level of customer

empowerment is seen, the very nature of financial services may change. Four
postulated strategic business models arising from e-commerce are: intermediary
marketplace, work-site marketing, eyeball attractor and transaction processor. Within
the insurance industry, there shall be less of a distinction between short and long term
insurance products and product design and the pricing of such products shall
dramatically adapt to come in line with Internet selling methods. This however may
affect the long term financial stability of the insurance company with insurance
companies having to lower their profit margins to compete on-line and the dynamic
nature of e-commerce having valuation, solvency and appraisal implications, as well
as affecting the actuarial control cycle.