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Transformation of Term Insurance through IRDAI Regulations Amidst the Global Pandemic

The insurance industry has remained resilient even in the midst of the pandemic. This is primarily due to transformations brought in by the Insurance Regulatory and Development Authority of India (IRDAI) that made key digital services available. Thus, while industries around the globe were seen scrambling to catch up with implementation of digital services, the insurance sector in India has remained largely untouched thanks to key interventions and transformative changes introduced by IRDAI.

As a result of these new measures, insurers and policyholders were not impeded by the pandemic guidelines for social distancing and stay home rules. Policyholders managed to purchase and claim life insurance without the interruptions caused due to the pandemic. These timely interventions have surely made the year a transformative one for the insurance sector. The changes are paving the way for a much needed seamless experience for both policyholder and insurance providers. This article looks at IDRAI’s key regulatory changes, which has changed the insurance industry for the better.

Death Due to Covid-19 Under the Term Insurance Plan

When the pandemic hit India, there was significant confusion around policyholders term insurance. Amongst the prominent doubts that policy holders had was the coverage against death due to illnesses related to covid-19. The IRDAI put the doubts to rest by announcing that all deaths due to COVID-19 will be covered by respective term life insurance policies. As per the new guidelines, if insured individuals passed away due to covid-19, their dependents or nominees will be paid death benefits. The dependants or the nominee must file for a death benefit claim by filling up the form from their respective term insurance provider.

These guidelines provide much needed relief for term insurance policy buyers and the policyholder. Term insurance providers cannot reject a claim that is being made with respect to covid-19.

The e-KYC

The electronic KYC(Know Your Customer) is a much needed inclusion into the insurance domain. During times of covid-19, insurance companies were allowed to use Aadhaar based authentication services to complete the KYC process. This process will be maintained even once the pandemic comes to an end. With e-KYC in place, policy buyers will enjoy the convenience of buying new policies from the comfort of their homes. This new KYC process promises to enhance overall customer experience and save time for all parties involved in the onboarding process.

  • Buying Term Insurance Plan with OTP

As per the new IRDAI guidelines, prospective customers will be able to buy term insurance plans by simply authenticating personal details with a one-time password (OTP) sent to their official mobile number. The process for the OTP authentication will be done through the online procedure and will replace all physical presence and need of policyholder’s signature.

  • Email and Mobile Authentication

Going forward, insurance providers will be allowed to verify policy proposals through email or mobile. This process will be carried out at the provider’s end wherein an email will be sent to the prospect policyholder. In order to confirm the policy details, the customers will have to click the confirmation button to access their policy details. The implementation of digital authentication will streamline all new term insurance policy purchases and bring about greater transparency to the insurer.

Digital Term Insurance Policy

In accordance with convenience and safety of policy buyers as top priority, Insurance regulator IRDAI in its new direction has mandated insurers to provide insured individuals the policy document through email. However, If the insured individual explicitly asks for a hard copy, the respective insurance provider has to issue a new document at no extra cost. The implementation of a digital term policy document will expedite the policy issuance time at the insurer’s end. What’s more, this lack of physical documentation will bring about greater transparency and security of customer information while strengthening insurance provider databases.

Conclusion

The new guidelines brought forward by IRDAI are sure to completely transform the landscape of the insurance industry for the better. The move to digital has not only paved the way for a safe and convenient means to buy term insurance; it has also brought it greater transparency and forced insurers to take a more modern approach to digital insurance. Though the transition may see a few challenges down the line, in the long run it’s a win-win for both the insurer and the insured.

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