Page 88 - Life Insurance Today July - December 2020

spective policy holders electronically by also been imposed in respect of sales The panel will study various statutory
three months till March 31, 2021. In made by individual insurance agents. provisions on information and cyber
view of the disruption of normal business security to evaluate critical issues in-
activity following outbreak of the The insurance agents should not solicit volving the legal aspects of transac-
coronavirus pandemic, IRDAI in August, non-single premium unit-linked insurance tions in cyberspace. It will also exam-
on an experimental basis, had permitted policies for annualised premium exceed- ine the various types of incidents in-
life insurers to obtain consent of ing Rs 50,000 or single premium unit- volving cybersecurity in the recent past
customers for pure risk products (poli- linked insurance policies exceeding Rs and possible insurance coverage strat-
cies which do not involve any savings 1,00,000. Besides, the insurer should egies for those, and the cyber liability
element) electronically till December 31. verify at least 3 per cent of sales to as- insurance covers available in the In-
certain compliance with these provisions. dian market and in other developed
On a review of the working of the jurisdictions. The working group will
arrangement and on the basis of Insurers have been asked to provide submit its report within two months.
feedback from the life insurers, the In- appropriate training to all persons in-
surance Regulatory and Development volved in the sales or solicitation pro- IRDAI's plan to prohibit
Authority of India (IRDAI) has now cess to ensure that the consent of the
extended the time period and the fa- customer is obtained only after clear use of critical illness policy
cility to all products. "Life Insurers are information has been provided on the as collateral for loan may
allowed to obtain the customer's con- product being sold. affect nonlife industry
sent through electronic means i.e.,
without requiring wet signature on the IRDAI mulls basic stan- IRDAI is exploring at prohibiting the
proposal form, for the business solicited use of critical illness policies as collat-
by individual insurance agents and dard policy for cyber eral against housing or vehicle loans.
insurance intermediaries under all prod- attacks It's a common practice to have a life
ucts, till March 31, 2021," it said in a IRDAI has formed a working group, to insurance or a critical illness policy as
circular. examine the need for standard cyber a collateral for securing a housing or
liability insurance products. a vehicle loan from various housing fi-
It further said the suitability assess- nance companies (HFCs) and non-bank-
ment, benefit illustration (wherever
Observing that cyber attacks are on ing finance companies (NBFCs). The
applicable) and the completed pro-
the rise with a number of high-profile insurance policy acts as a security for
posal form should be sent to the
proposer on his/ her registered e-mail data breaches amid the Covid-19 pan- the lender as the claims from the
demic, IRDAI said cyber security is the policy can be used for repayment of
ID or mobile number in the form of an
"most important need" for all sectors the loan installments in case the policy
e-mail or a message with a link as the
today to address the numerous risks holder loses his life.
case may be. "The proposer, if he/she
posed by cyber attacks.
wishes to consent to the product of- Critical illness policies are issued by
fered, the benefit illustration and the general insurance companies and they
The general liability policies do not
completed proposal form, may do so pay the insured individual a lump sum
cover cyber risks, and cyber cover
by affixing digital signature or by amount if diagnosed with any of the
products currently available are highly
clicking the confirmation link or by specific illnesses on a predetermined
customised for clients.
validating the OTP shared," IRDAI said. list. Any move from IRDAI to prohibit
"Hence, it is felt that a basic standard use of critical illness policies as collat-
Also, the insurer should not insist on product structure is required to pro- eral for securing loans may be nega-
payment of moneys towards proposal vide insurance cover for individuals and tive for the general insurance
deposit till the receipt of consent of establishments to manage cyber risks," companies selling these policies as it
the proposer. Certain conditions have IRDAI said in a circular. may impact their sales.

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88 July - December 2020 Life Insurance Today