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.
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.
Apart from detailing procedures for grant of permission and stipulating conditions, including the internal monitoring, review and evaluation of systems and controls required of the ISNP, the guidelines said insurers may offer discounted pricing on the products when sold through its platform.
Products that are displayed on the ISNP shall be up to date and reflect a true picture, and the differential price for products offered on the ISNP of any of the applicant, however, shall be the same, the regulator said.
The ISNP would deal with all kinds of insurance products, from life, health to general, and the regulator is expected to automate the process of receiving applications for setting the platform.