In a big digital push, the Insurance Regulatory and Development Authority of India (IRDAI) on Friday (September 11) has allowed health and general insurers to obtain consent of prospective policy holders through a duly validated One Time Password (OTP), thus dispensing with the practice of getting a wet signature on policy documents. The relaxation will be valid till March 31, 2021.
The move will test the depth of the insurance market, which has only a handful, primarily the top six or seven companies, have been investing deeply in technology integration and digital distribution.
However, with over 30 general insurance and over 24 life insurance companies, India is a bustling insurance market with penetration in rural areas too thanks to public insurance policies and plans.
As per insurance providers, startups and technology providers, in the ongoing pandemic, there has been an increase observed in health cover buying for youngsters and senior citizens. Health insurance sales went up by 40%, according to PolicyBazaar. Besides this a number of Covid-19 standalone products were launched by health insurers.
Policy Push From RBI
The move comes in the backdrop of Reserve Bank of India’s (RBI) decision to ban use of direct selling agents (DSAs) to source retail loans and carry out physical verification of documents of borrowers.
The insurance regulator’s move comes in the wake of representations it received from insurance companies for exemption from issuing physical documents and hard copy of the policy and proposal form. IRDAI added that insurers can now obtain customer’s consent through OTP, registered email or mobile.
Similar to RBI’s change in norm to do away with direct selling agents, IRDAI’s decision is likely to impact the blue-collar workforce engaged in the field.
IRDAI’s decision comes in the backdrop of fresh measures taken by the regulatory body post-pandemic. In June, it had asked insurance companies to process insurance claims for telemedicine consultations while following the terms and conditions of medical insurance policies.
IRDAI, in a letter to insurance companies, said that they are planning to incorporate video-based know your customer (KYC) verification of customers looking to buy insurance products. This whole process will be undertaken by an official of the insurer through a consent-based audio-visual interaction with the customers. The video KYC will be permitted for both life and general insurance companies.