IRDA License

Ecommerce Insurance ISNP (Insurance self Networking Platform)

This article is all about the ecommerce insurance ISNP –Insurance Self Regulatory Networking Platform. Insurance Self Regulatory Networking Platform means an electronic platform set-up by the applicant with the permission of the Authority. The registration and licensing of Ecommerce Insurance Agents are covered in the IRDA Insurance License.

The ISNP are set up by an insurer or insurance intermediaries like Brokers, Corporate Agents, and web aggregators.

According to IRDA definition section 3, the following terms are defined as follows:

1. Section 2(d) – Insurance Self Platform Network means an electronic platform set up by the applicant with the permission of Authority. According to ecommerce insurance guidelines, an insurance agent is not permitted, to set up self network platform, and instead can use the respective insurer’s self network platform. However, the insurer is liable for the compliance of these guidelines, on behalf of the insurance agents.
2. Sections 2(e) – Market Participants under the ISNP, are those who are registered under the Authority – such as Insurers, Insurance intermediaries.
3. Section 2(b) – Authority- Here the Authority for ecommerce insurance is IRDAI-Insurance Regulatory and Development Authority^[1].

In India, we can see developments in the Insurance Regulatory Development Authority of India. The recent developments of IRDAI are:

1.  A rapid increase in the number of issuers;
2. Significant transaction in existing players;
3. New forms of online e-commerce;
4. The addition of insurance intermediary, it is a new category;
5. Diversity in the products offer; and
6. Evolving Business Processes.

This development has brought introduced a new concept in the Insurance business. This new business is the Ecommerce Insurance.

What is Ecommerce Insurance Guidelines?

The IRDA issued guidelines on the Ecommerce Insurance (as Ecommerce Guidelines) on March 9, 2017. This regulated the establishment of Insurance Self Regulatory Network-ISNP by insurers and insurance intermediaries (other than insurance agents) to sell and service insurance policies.

Objective of ISNP

The ecommerce is seen as an effective medium to increase the insurance business and financial inclusion effectively.

1. E-commerce is expected to lower the cost of the transacting insurance business.
2. It can bring higher efficiencies and greater reach.
3. Considering the Development of ISNP, the online sale of policies were already permitted, it has been neither paperless nor without human intervention.
4. The ecommerce insurance guidelines –ISNP are a new channel to market or purchase insurance products.
5. At substantially lower cost Online products of non-life insurers can be made available.
6. It will raise the demands for householders’ health and accident policies, amongst the middle-class people, who are not approached by the intermediaries.
7. Remuneration is given to promoters who are registered insurance self network platforms by the IRDA.

Features of ISNP- Ecommerce Insurance

The ecommerce guidelines are set out the procedures for granting permission to establish am ISNP to undertake ecommerce insurance activities in India.

Salient Features:

1. ISNP-Electronic Platform

ISNP is the electronic platform for the sale or service of the insurance policies.

2. ISNP must be registered with ecommerce insurance guidelines

ISNP’s must be registered, and the legal entities must be allowed, to sell the insurance products online. The existing insurance policy companies who have established their own ISNP’S or insurance portals, for selling & servicing insurance products, they can continue, provided the current insurers, or insurance intermediaries, have registered themselves under the requirements of the Ecommerce guidelines within 3 months and have obtained the necessary approvals from IRDA.

3. Selling in electronic form

The products of insurance must be sold in electronic form, following the principles of IRDAI.

4. Recognition of payments in e-wallets

The ecommerce guidelines have recognised the payments of premiums in the form of e-wallets. There can be no cash backs, promotional discounts or incentives, strictly prohibited by IRDA in the code of conduct.

5. Not allowed redirection of Internet Traffic

The ISNP’s are strictly prohibited from accepting the redirected internet traffic, references other than from market participants.

6. Section 64 VB(1) of the Insurance ACT, 1938

Market Participants must ensure compliances of the Section 64VB (1) of the Act.

7. Payment of fees according to IRDAI

The fees, charges, payments, which are allowed under IRDAI as commission remuneration, rewards to Insurance Agents/Intermediaries, it can be paid or shared between the market participants in order to use an ISNP.

8. Adverse findings of ISNP to IRDA

It means that the adverse findings related to the ISNP after the annual review of its controls, systems, and procedures. It must be reported to the IRDAI.

Procedures for Insurers given under Ecommerce Insurance Guidelines

1. Filing of Application Form-1

The insurers desiring to undertake ecommerce insurance activities file the form-1. The application submitted shall be decided within 60 days from the date of submission by the applicant. If notice is served, the applicant will get 15 days to complete the application.

2. Furnishing of Information- section 7

The applicant must submit the information, clarification or personal representation regarding the matters relating to ISNP for undertaking ecommerce insurance activities in India.

3. Grant of Permission- Section 8

The permission shall be granted only after ISNP has subjected to the conditions provided by IRDA, 1999 and Insurance Act, 1983 and guidelines and circulars issued from time to time.

4. Renewal of Permission

The certificate of registration for an ISNP is valid until the certificate is valid for the insurance intermediaries. This means there permission is dependent on the continuance of the business of insurer intermediaries.

5. Continuous internal monitoring and evaluation of systems of controls.

Till the time privacy of data is allowed.

Operational Issues by ecommerce insurance- Section 15

The following minimum requirements have to be ensured by the ISNP for undertaking the ecommerce insurance activities, in India, by the applicant:

1. Online offering-

The applicant ISNP shall ensure regular website &mobile or both the person.

2. Internet website & mobile app-

The applicant ISNP shall show his legal name and his other details on the website

3. Proper disclosures

Proper disclosure of the features shall be made by the ISNP about the insurance product.

4. Presale solicitation
5. Information sharing with the prospect

It shall mention the details of the product and about the intended customers who can buy the product.

6. Type of products

Complete details on the product change and renewal procedures to the customer. The benefits attached to it.

7. Pricing

The product shall be shown as in the compliance which is approved by the Authority.

8. Commissioning or Remuneration to ISNP-

The products sold by ISNP shall get the requisite commission, fees etc.

9. Proposal form
10. Compliance to KYC /AML forms

The compliance of KYC norms

11. Creation of e-insurance account

Within 15 days of issuing policies, the e-insurance account shall be made.

12. Payment of premium

The payment of premium can through debit card/credit card/ net banking etc.

13. Issuance of e-insurance policies

On completion of payment of premium or sale of the policy, the e-receipt shall be generated.

14. Servicing of policies
15. Privacy of personal information and data security-

Data security is the duty of every applicant’s ISNP.

16. Display and Grievances

Conclusion

It can be concluded that that idea of providing registration to ecommerce insurance applicants ISNP in the IRDA Insurance License category, is the secured way for the Authority to keep monitoring. The IRDA will regularly monitor and checks the insurance activities enrolled as ISNP- insurance self networking platform, on the internet. As per the recent Google survey, 200 million people prefer to purchase and renew their policies online. The increased online access of the ecommerce platforms, the IRDA stated that the ecommerce insurance guidelines are part of the developmental mandate, and it promotes ecommerce in the cyberspace.

Read our article:What is an Insurance Self Network Platform (ISNP)?