Page 10 - Insurance Times Octoberr 2022

IRDAI plans to demateria- said in a draft notification issued. The annual life certificate through digital
board approval policy shall be reviewed means.
lise all Insurance policies
annually, it added.
"Now, the exit form of NPS will be
IRDAI has mandated dematerialisation
Terming the move as "major develop- treated as proposal form for purchas-
of new insurance policies by this year-
ment" for all life insurance companies, ing annuity, thereby reducing the time
end. It has urged all insurance compa-
industry insiders said the regulations will and efforts of senior citizens as well as
nies to dematerialise their existing or
help life insurers with large insurers. Also, in order to increase the
old policies by December-end, industry
bancassurance channels, while smaller adoption of technology, insurers have
experts have said.
firms size may lose market share. The been advised to adopt Aadhaar-based
In a move to make the dematerializa- proposed lowering of commissions could authentication for verification of life
tion process of insurance policies faster, be a disincentive for part-time and non- certificate, such as Jeevan Pramaan, a
e-KYC will also become mandatory for serious participants. Government of India initiative on bio-
all insurance policies, starting Novem- metric-enabled digital service," IRDAI
Industry observers also said since the
ber 1, 2022. Insurance policies could be said in a release.
payouts to insurance agents and insur-
dematerialised with National Securities
ance intermediaries should be made NPS subscribers are required to utilise
Depository Limited (NSDL), Central De-
known to the customers under the pro- at least 40% of the total accumulated
pository Services Limited (CDSL) or
posed regulations, customers are go- corpus to purchase an annuity plan at
Karvy, according to industry experts
ing to get the benefit in terms of better the time of maturity. The remaining
with knowledge of the matter.
service and greater transparency in 60% is eligible for withdrawal as lump
Dematerialisation or 'demat' will allow product understanding. sum at retirement.
a policyholder to create a portfolio of
IRDAI said 20% will be the maximum
insurance policies and store them in an
commission or remuneration, as a per- IRDAI reduces number of
electronic form with an insurance re-
centage of premium that is allowed for
pository. Put simply, one will not have returns to be filed by in-
life insurance products offered by life
to engage in any paperwork while re-
insurance companies, for first year pre- surers for health insurance
newing his/her policy. This process
mium for regular premium or limited In order to further cut compliance bur-
would result in reduced transaction
premium payment including deferred den for insurance companies, regula-
costs and quick modifications in policies.
annuity/pension. For these types of tor IRDAI rationalised health insurance
products, maximum commission for re- business returns reporting norm by re-
Proposed 20% cap on
newal premium should be 10%. For ducing the number of returns that need
agent commission could single premium policies, maximum com- to be filed in a year.
mission for single/first year premium
boost insurance industry The move is part of promoting ease of
should be 2%, while for group fund
IRDAI proposal to put a lower cap of doing business for insurance companies
based policies it will be only 0.5%.
20% on commissions and remunera- and to reduce the compliance burden
for all the regulated entities, said
tions paid to agents and intermediaries
IRDAI eases NPS regula- IRDAI.
under both life and non-life products
could lead to faster growth of the in- tions Towards this endeavour, the health in-
surance market, analysts said. IRDAI has done away with the need to surance returns being filed by the in-
If implemented, the move would reduce submit a separate proposal form for surance companies have been signifi-
costs for insurers and allow them to taking an annuity product from pro- cantly reduced, it said in a circular.
make products more affordable. ceeds of National Pension Scheme "Now, the general and health insurers
(NPS).
"Every insurer shall have an explicitly will have to file 8 returns and life insur-
written policy for payment of commis- Currently, retirees submit an exit form ers will be filing 3 returns in place of 17
sion or remuneration or reward to in- to NPS and a proposal form to insurers returns being filed currently. This step
surance agents and insurance interme- at the time of superannuation. The in- will further help insurers in focusing on
diary which shall be approved by the surance sector regulator has also al- their business rather than a plethora of
board of the company," the regulator lowed insurance companies to take the compliances and in turn help in increas-

10 The Insurance Times, October 2022