IRDAI – Relaxations for e-Insurance policies and proposal forms

The Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations, 2016 (e-Insurance Regulations) governs the issuance of electronic policy and submission of electronic proposal form of insurance policies.

 “E-insurance policy” or electronic insurance policy” means a policy document which is an evidence of insurance contract issued by an insurer and digitally signed in accordance with the applicable provisions prescribed by law and issued in an electronic form either directly to the policyholder by the insurer or through the platform of registered Insurance repository.

 As per Regulation 3 of the e-Insurance Regulations, every insurer soliciting insurance business through electronic mode shall create an e-proposal form similar to the physical proposal form approved by the Authority. The e-Insurance Regulations mandate that, every such insurer, shall also make available physical version of the e-proposal form.

Per Regulation 4(iii) of the e-Insurance Regulations, all policies issued in electronic form by the insurer directly to the policyholder shall also be issued in physical form. In all such cases, copies of the proposal form, etc shall also be sent in physical form.

However, this is subject to the proviso that if the Insurance Regulatory and Development Authority of India (IRDAI) is satisfied that it is in the interests of policyholders and for orderly growth of Insurance Industry, it may exempt such issuance in physical form, subject to conditions specified to be fulfilled by the insurer. 

In the wake of the COVID-19 pandemic, IRDAI, on 10 September 2020, based on representations received from insurance companies, by virtue of its power under Regulation 4(iii) has granted exemption from the requirement to issue physical policy document and hard copy of proposal form (Circular). This exemption has been granted subject to the following conditions to be fulfilled by the insurers: 

1) Insurers shall send the policy document and a copy of the proposal form through digital. They shall be sent to the registered e-mail id or mobile number provided by the customer only on the specific consent provided by the policyholder. 

2) The policyholders need to be informed through SMS that policy document or copy of the proposal form have been sent to their e-mail id or any other digital or electronic mode. 

3) Insurers shall put in place proper mechanism to ensure that the documents are delivered to the designated e-mail id or mobile number of the policyholder and an acknowledgement is appropriately obtained or auto-collected on delivery.

4) When documents are forwarded by electronic means, the mechanism of policyholder having received the document or the electronic platform having delivered the documents shall be maintained. It shall be clearly informed to the policyholder that the date of delivery of the document is reckoned for the purpose of considering any applicable free look requests.

5) Insurers shall preserve the records of such acknowledgements for further reference.

6) The policy document sent electronically shall contain all the schedules, terms and conditions, benefits etc that are otherwise available in the physical document. 

7) Policyholders shall be also informed that printing of physical policy document and dispatch of the same along with the copy of proposal form may be delayed due to operational difficulties in the wake of ongoing COVID-19 pandemic situation. 

8) The policy document sent electronically is as valid as the physical policy contract or document. Wherever the policy holder demands the physical version of the policy document or copy of the proposal, the same shall be made available.

9) Wherever policy documents could not be sent through electronic means due to any reasons, the insurance companies shall compulsorily forward the physical documents to the policyholders.

Further, according to Regulation 8(1) of the IRDAI (Protection of Policyholders’ Interests) Regulations, 2017, except in case of a marine insurance cover, or such other covers approved by the IRDAI exempting usage of proposal form, a proposal for grant of insurance cover, either for life insurance business or for general insurance business or for health insurance business, must be evidenced by a document in written or electronic or any other format as approved by the IRDAI. It is the duty of the insurer to furnish to the insured, free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal submitted by the insured.

Where proposal forms are collected in terms of the aforesaid regulation, the Circular allows the insurers to obtain the customer’s consent without requiring wet signature on the hard copy of the proposal form, subject to the following conditions:

a) The completed proposal form shall be sent to the prospect on his / her registered e-mail ID or mobile number by means of a message with a link, as the case may be. 

b) If the proposer wishes to give consent to the proposal, the same may be permitted by providing a link for confirmation or through One Time Password (OTP) duly validated.

c) Insurers shall maintain verifiable, legally valid evidence for the proposer’s consent received for the fully completed proposal form.

d) Insurers shall be responsible for the following:

(i) Providing approved digital sales material to insurance agents/ intermediaries and ensure that only that material is used while soliciting the business;

(ii) Authenticating the email IDs/ mobile numbers of the proposers including through de-duplication of the data and such other means; and

(iii) Ensuring the suitability of the product being sold. 

The exemptions granted under the Circular will be applicable till 31 March 2021.