Insurance Policies in Demat form soon

Insurance Industry in India shall gradually move towards a paperless insurance industry. “IRDA is working on the repositories and contractual liabilities to suit the requirements of a paperless insurance industry,” said J Hari Narayan, chair­man, Insurance Regula­tory and Development Autho­rity (IRDA).

He spoke at a CII-sponsored session on addressing distribution challenges in the insurance sector here on Friday.

Narayan pointed out that India followed rule-based regulations as opposed to principle-based regulations, which suited more to the Indian context. “However, we are also trying to implement the best practices of both the approaches into the Indian system,” he said.

He felt that low-cost broking intermediaries must cater to the insurance requirements, especially in the tier-II & tier-III cities. “Insurance depends on trust and competence”, he said.

Speaking about India’s approach towards the insurance sector, in comparison with other countries, Mr. Narayan pointed out that India followed Rules based Regulations vis-à-vis Principle based Regulations, which suits more to the Indian context. “However we are also trying to consider the best practices of both the approaches into the Indian system”, he said.

Mr. Narayan opined that low cost broking intermediaries must be taken up to cater to the insurance requirements, especially in the Tier-II & Tier-III cities. Mr. Narayan also pointed out that in insurance, distribution is a challenge. “Insurance depends on Trust and Competence”, he said.

Mr. Ashvin Parekh, Partner, National Leader – Global Financial Services, Ernst & Young Ltd., presenting the CII recommendations on addressing distribution challenges said that on the Life Insurance front, the regulator may consider a process for ushering in regulatory changes with appropriate phase-ins; Regulatory guidelines should allow room for innovations; Conducive level of regulations v/s micromanagement; Differentiated approach for licensing of intermediaries; and Awareness creation initiatives.

Presenting the recommendations on the Non-Life Insurance front, the Mr Parekh said that the regulator may explore creating of class 1(retail) agent and class 2(all products) agents for general insurance. The regulator may examine a minimum commission structure for underinsured segments, he added. The regulator may also examine removal of commission caps and commission structure to form as part of product design and actuarial sign-off, he alluded.

Earlier, in his welcome address, Mr. Sanjiv Bajaj, Co-Chair, CII National Committee on Insurance and Pensions & Managing Director, Bajaj Finserve Limited, said that distribution challenges was one of the major issues impacting the growth of insurance and pensions in India and said that the CII National Committee on Insurance and Pensions has set out recommendations for the Government and the regulator on ways and means of strengthening the distribution channels in Insurance.