By Sagar Sen,

While the committee on electronic issuance of insurance policies is scheduled to present its recommendations to the Insurance Regulatory and Development Authority (Irda) by March 4, the debate is still on whether the present infrastructure available in the industry can support such a system.

There are simple yet critical technicalities that make online issuance a tricky business.

For instance, it is convenient for a customer to renew a car insurance policy online, but for such a system to work, the insurer must have historical data, such as previous policy and vehicle registration certificate. In most cases, this is possible only if one chose the same insurance company year after year. If the insurer is changed, there can be delays – defeating the very purpose of buying a policy online.

Geeta, a self-employed professional, narrates her plight. “While making payment for the renewal of my car insurance, the portal repeatedly gave error messages. With nobody to assist online or over the phone, I had to stop attempting payment. I got the policy offline the next day.”

If car model or any details like CNG/LPG fitting are not available on the portal, the insurance company cannot process the policy application online, she added.

Most life insurance companies such as Aegon Religare, ICICI Prudential and Kotak Life offer electronic term insurance policies. However in a term insurance policy, medical tests and supporting financial documents such as previous income tax returns and PAN card copy are mandatory. In an e-policy, the payment is done online but arrangement for documents pick-up and medical tests are all done offline.

Experts feel for a fool-proof online policy issuance system to work, it needs to be robust yet flexible. Going online should mean doing more than just paying the renewal premium, viewing the latest fund value or checking claim status.

The reach of the online medium is limited. “Insurance penetration through the online mode is linked to internet penetration and customers’ comfort with electronic transactions. As of now, this facility can benefit only a certain segment of population that is internet-savvy and at ease with online business dealings,” said Sujata Dutta, senior vice-president and head of marketing, DLF Pramerica Life Insurance.

Getting timely receipts for online payments can be another pain. “I needed the premium receipt by December 31, so I paid the premium online. The amount was instantly debited from my card, but the receipt was not generated. After repeated follow-ups, I was told that the payment has not been cleared by the payment gateway,” said Amit Kumar MG, who finally missed the deadline for submission of his premium receipt.

Health insurance players Bajaj Allianz General, Apollo Munich and Max Bupa do not offer policies online where medical examinations are required. However, in cases where medical and documents like age proof, address proof are not required, the policies are issued online.

“In cases where underwriting is done at the point of sale, the process may appear longer as it requires the customer to fill in a detailed application form and address a number of health-related questions,” said Shefali Chhachhi, director of marketing at Max Bupa Health Insurance.

However, problems in online issuance of a health insurance policy typically arise when the customer requires further underwriting or medical tests. In that case, the policy is not immediately activated on online purchase. One has to undergo further tests/underwriting, she added. The customer must be advised that the payment should be made only when other formalities have been completed.

Main tasks assigned to the new committee are to decide on the operational issues present in implementing electronic policy issuance, reduction in cost and any other legal complications arising out of such a procedure.

While the legal sub-committee has put together a paper on the issues that need to be taken care of before policies are issued online, grey areas exist.