In the present scenario, insurance companies let customers buy motor and personal accident policy online with a single-factor authentication. Insurance Regulatory and Development Authority of India (IRDAI) is going to amend this and phase in two-factor authentication for e-insurance policies.
The recommendation to the insurers is to issue One Time Passwords (OTPs) with digital and electronic signatures. The aim is to further authenticate the process of online sales and make it more reliable. These changes will reduce the instances of online fraud as well.
The process of digital signatures, if compared to e-signature, is more tedious. Since e-insurance is issued only after providing a digital signature or Aadhar verification, the online procedure loses its ease of transaction, which is the main attraction of buying online.
Thus, IRDAI is gearing towards a two-factor authentication with the generation of OTPs, in place of the system that is currently followed.
Insurance companies are working towards implementing these proposals that will enable customers to buy insurance policies with OTP generation. To further tackle the issue of online fraud, insurers are hopeful for the implementation of a central data repository – a common data pool to avoid fraudulent transactions.