Imagine a scenario where you no longer need insurance papers. An insurance agent comes home and suggests a policy that is appropriate for your needs. After the payment a unique identity number is generated, which acts as the policy document.
With high penetration of mobile phones even in the Indian hinterland, insurance companies are mulling over the idea of offering quick and instant policies that are easy to issue, renew and store.
The mobile phone can be used as a storage platform for the product. So if an individual starts with a life insurance policy of Rs 10 lakh at the beginning of their professional career, he/she would be given an option to top-up the amount every three to five years.
If there is a life-event like a wedding or child-birth, adequate policies complementing the existing products would be offered.
Insurance executives told Moneycontrol that paper-free insurance policies would be hassle free with no fear of documents getting lost. Some companies are in the process of finalising the structure of such products before seeking regulatory nod.
Policyholders could login into an application and use the unique id to check policy details.
For products like car insurance, this facility is available in a few states like Telangana. However, Regional Transport Offices (RTOs) across other states have not yet come to a consensus of allowing digital insurance policies.
While insurance repositories were set up for the very same purpose, the uptake for the services has been very low. Customers insist on a paper policy because insurers are ready to offer it. It was anticipated that the regulator would make digital insurance mandatory, but no such step has been taken.
With almost Rs 250-300 spent per paper policy on an annual basis for maintenance, the mobile-only insurance policy is the next logical step.
Not only will it help cut costs, it will enable insurers to focus on core service aspects of products.
For customers, this will be a win-win situation. While the digital policy will help them gain access to the product through a secure application, filing claims and getting policy settlements would happen instantaneously.