Voice replaces your Signature

Dipak Mondal/Money Today | Print Edition: May 2011

You can now purchase a life insurance policy over phone without the trouble of physically filling any application form. The new Insurance Regulatory and Development Authority (Irda) guidelines on telemarketing allow you to purchase life insurance policies without filling any form or signing any document provided the telemarketer furnish the transcript of your conversation with the insurance agent to the insurance company.

The guidelines specify, "In all instances where a policy is issued without obtaining a proposal in physical form, insurers shall forward a verbal transcript of the voice/electronic record of the queries raised and answers thereto on the basis of which the policy has been underwritten, along with the policy bond." However, all know-your-customer (KYC) norms would have to be followed in the process of selling a policy through distance marketing.

"This is a path-breaking change and makes sales of life insurance products easier," said Girish Batra, chairman and managing director, NetAmbit, a telemarketing company that sells financial products.

According to Mayank Bathwal, chief financial officer, Birla Sunlife Life Insurance, the move will help evolution of telemarketing.

 Do's and don'ts

1. Telemarketers should preserve recordings of all calls till such records are transferred to the insurer

2. Insurers/brokers should monitor the calls live by arranging for listening to at least 1% of the calls as they happen.

3. Insurance companies should verify at least 3% of calls leading to sales.

4. Insurance brokers should suggest the best available product in the market that fits the needs of the client.

5. The price comparison charts that are displayed should be up to date and reflect a true picture of all the available products.

6. Insurers should not make any payment to brokers other than the requisite commission for selling a policy.
The practice is already prevalent in the general insurance sector, where one can purchase travel and health insurance without having to fill forms or signing any documents. Meanwhile, the new guidelines on telemarketing ask insurers and brokers to follow "standardised scripts for presentation of benefits, features and disclosures under each of the products proposed to be sold over the distance modes."

The records of every call made and SMS sent by a telemarketer/insurance broker that materialises into a policy should be transferred to the insurer within 30 days of conclusion of the sale.

The insurer is then required to preserve the record of the entire process beginning with lead generation/solicitation and concluding in sale of insurance, for a period of six months beyond the term of the policy or until satisfactory settlement of claim.

The new guidelines also put a cap on sale of unit-linked insurance plans, or Ulips, in its recent guidelines on distance marketing of insurance products.

Insurers have been barred from selling Ulips with annual premium over Rs 50,000 in case of non-single policies and Rs 1,00,000 in case of single premium policies through telephonic mode (both voice and SMS).

Ulips account for over 55% of total life insurance premium collection as per recent data from Life Insurance Council, a body of life insurers.

On the cap on Ulip sale, Bathwal said the average ticket size of a life insurance policy is Rs 20,000 a year and hence the cap wouldn't have make much of impact on sales.

The regulator also prohibited sale of universal life plans through telemarketers. In a universal life plan, the premium over the insurance (or mortality) charges, commission and expenses goes into a cash or savings account on which the insurer pays a guaranteed rate of interest. In case a person stops paying premium, this cash balance is used to meet the expenses associated with providing death cover and hence the policy continues as long as the cash balance lasts.

The guidelines will come into effect from October 1, 2011.

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