Insurance repositories may see muted business in initial phases of digitisation

Insurance repositories are expected to see muted business in the initial phases of policy digitisation which will be mandatory above a certain limit from October 1. This is because insurance companies are not required to tie-up with these entities to issue e-insurance policies. Earlier, the regulator had said that the insurers will have to tie-up with these repositories compulsorily to offer digitised policies.

As per the regulator's website, the industry has five registered insurance repositories in the country. These include Karvy Insurance Repository, Central Insurance Repository, CAMS Repository Service, NSDL Database Management and SHCIL Projects.

In its issuance of e-insurance policies regulations 2016, Insurance Regulatory and Development Authority of India (Irdai) said that electronic insurance will become mandatory for annual premium equal to or above Rs 10,000 (single/annual premium) in life insurance policies.

"It was earlier anticipated that all insurers will have to tie-up with repositories. But now that it has been made optional, business for insurance repositories will be slow in the initial phased. However, it is expected to pick up pace when a large volume of policies are digitised, since we will be able to offer specialised services for the customers at low costs," said a senior official of an IRDAI licensed repository.

Currently, less than 2 per cent of the policies sold in the country are in electronic format. India First Insurance launched the first digitised policy in September 2013. An insurance repository is a facility to help policy holders buy and keep policies in electronic form, rather than as a paper document. These repositories, like share depositories or mutual fund transfer agencies, would hold electronic records of policies issued to individuals. These are called 'electronic policies' or 'e-policies', held in an electronic insurance account.

Insurers have been engaged in active campaigns to highlight the importance of holding insurance in a digital format, which protects a policy document from damage or loss, leading to possible claim rejection. The sector regulator's estimates suggest Rs 150-200 per customer is spent by a company annually in maintaining policies in physical form. The digital initiative, pushed by the Irdai, is expected to save at least Rs 100 crore a year for the sector.

The Life Insurance Corporation of India, the country's largest insurer, has launched its own platform for e-services which will offer a multitude of services including electronic policies. It has decided not to tie-up with any external insurance repository for digitising policies. The repositories, similar to demat accounts, hold electronic records of policies issued to individuals.

Here, electronic insurance policy will mean a policy document which is an evidence of insurance contract issued by an insurer and digitally signed. Customers would have an e-Insurance Account which will be an electronic account opened by a person with an insurance repository wherein the portfolios of insurance policies of a policyholder are held in an electronic form.

IRDAI has asked every insurer soliciting insurance business through electronic mode to create an e-proposal form similar to the physical proposal form approved by the Authority. Such form should enable capture of information in electronic form that would enable easy processing and servicing. The e-Proposal form will also have a provision to capture the electronic Insurance Account (eIA) number.

These repositories are required to maintain records of e-insurance accounts with a unique number, records of e-insurance policies issued and of reconversion to physical form, an index of policy holders and their nominees/ assignees/beneficiaries in the respective life insurance policies, among others. They also have to maintain a history of claim data.

The regulator said that electronic insurance policies can be issued by the Insurers either directly to the policyholders or through the registered Insurance Repositories. All policies issued in electronic form by the Insurer directly to the policyholder will also be issued in physical form. However, physical version of the electronic insurance policies need not be issued when electronic insurance policies are issued through the platform of registered Insurance Repositories.

For general insurance, for all retail policies (except motor) and individual personal accident & domestic t ravel with annual premium above Rs 5000, the policy will have to be issued in electronic format. For motor retail and individual overseas travel insurance, all policies will be issued in electronic format.

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