All insurers may offer digitised policies from July

Already 1,10,000 policies have been digitised, but many customers are not aware of this process

All life insurance companies may be required to offer insurance policies in a digitised format from July onwards. In a recent meeting with the insurance industry, sources said that Insurance Regulatory and Development Authority (Irda) had asked companies to tie-up with all insurance repositories. At present, several insurers like Life Insurance Corporation of India (LIC ) do not offer the facility of electronic policy since they have not tied-up with any repository.

S V Ramanan, chief executive officer of CAMS Repository Service (CAMSRep) said that 1,10,000 policies have been digitised, but he added that many customers are not aware of this process. He explained that apart from the top bank promoted private life insurers, other companies have not been active in this space. CAMSRep, he said has digitised 70,000 policies across 380 plus locations.

An Insurance Repository (IR) is a facility to help policy holders buy and keep insurance 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 insurance policies issued to individuals. Such policies are called 'electronic policies' or 'e-Policies'.

Though Irda has only allowed life insurance policies to be digitised first, regulatory officials added that non-life policies like health and motor would also be allowed to be digitised in the near future.

Industry officials said that in their meeting with Irda in March, they had expressed some concerns about the need to have digitised products and tying up with all the five insurance repositories. "Not all customers want an electronic policy. For certain segments of the country where internet connectivity is low, an e-policy may not be feasible. Hence, our costs will not significantly reduce," said a senior executive of a life insurance company.

Though insurers may be required to have agreements with repositories in place by July, some insurers are in a wait-and-watch mode. A senior executive of a public sector insurance company said that they have already given their views on insurance repositories to Irda and only tie-up with the entities after clarity emerges on the issues.

Irda has not mandated customers to digitise their policies. However, it is anticipated that in the next 8-10 years, all processes would move into an electronic format.

According to Irda rules, customers would be allowed the facility of portability, wherein they could port or shift from one IR to the other if not satisfied with its services. However, they would be given a new e-Insurance Account with a new number if they avail of this facility.

With respect to non-life policies, there is not much clarity on the process. "Motor insurance policies may be digitised soon. However, we are not sure if the state transport authorities would accept motor policies in electronic format from vehicle owners. So, for the time-being, a physical document may still be necessary," said the chief claims official of a mid-size general insurance company.

At present, there are more than 330 million life insurance policies and 90 million general insurance policies that are in force in the country. On an average, Irda's estimates suggest that annually Rs 150-200 per customer is spent by an insurance company annually in maintaining policies in physical form. This initiative by Irda is expected to become 1,800 million pages annually and save more than Rs 100 crore for the industry.

The five companies include NSDL Database Management Limited, Central Insurance Repository Limited, CAMS Repository Services Limited, SHCIL Projects Limited and Karvy Insurance Repository Limited. Irda has recently clarified in its regulation on insurance repositories and said that insurers can enter into agreements with one or more repositories.

However, all insurers have not tied-up with all repositories to digitise existing policies. Hence, if an insured shifts from one company to the other which does not have a tie-up with a particular repository, it may be difficult to maintain records. "Policyholders are preferring to wait for another 12-18 months till all tie-ups with all repositories are in place, so that they do not face any administrative issues while transferring policies," said the chief executive of a bank-promoted insurer.

The objective of creating an insurance repository is to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes, modifications and revisions in the insurance policy with speed and accuracy in order to bring about efficiency, transparency and cost reduction in the issuance and maintenance of insurance policies. Policy holders have an option to choose to either digitise their policy or to have it in the existing format.

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