Online availability could drive down prices, especially for term life policies
Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines on insurance e-commerce, thus paving the way for electronic platforms that will market as well as service insurance products.
The insurance self-network platforms that are to be set up could be a regular web portal, mobile app or both. Entities registered with IRDAI, such as insurance firms or insurance intermediaries, are eligible to apply for setting up such a platform.
For customers, the key difference will be prices, with the products purchased on the platform coming at a lesser pay out. This will be more so in the case of term life insurance, sources said.
Over time, the companies would also have products that will be sold exclusively online.
IRDAI perceives e-commerce as an effective medium to increase insurance penetration and enhancing financial inclusion in a cost-efficient manner. The guidelines, IRDAI said, are being issued “to promote e-commerce in insurance space, which is expected to lower the cost of transacting insurance business and bring higher efficiencies and greater reach.”
The guidelines follow the exposure draft that IRDAI had released in June last year.
Insurers and insurance intermediaries who already have set up their own ISNPs or insurance portals for sale and service of the products will be allowed to continue if they comply with the requirements listed in the guidelines within a period of three months.
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