The Insurance Regulatory and Development Authority (Irda) is preparing to launch insurance repositories within the next few weeks. Sources said five entities-National Securities Depository, Central Securities Depository, Stock Holding India, CAMS and Karvy-had been given licences to become insurance repositories. Recently, Irda had said insurers could enter into agreements with one or more repositories.
An insurance repository would provide a facility to store insurance policies in electronic form and to undertake changes or revisions to these quickly. According to Irda norms, policyholders can opt to digitise their policy or continue with the existing format.
Irda officials said this would help insurance companies reduce the expenditure on storing physical insurance documents. Life Insurance Corporation (LIC) spends Rs 600 on storing each policy. A senior Irda official said if these policies were digitised, LIC would be able to save crores of rupees every year.
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Experts said a complete shift to the new mechanism would take time.
Irda is also exploring whether a 'demat-account'-like structure can be implemented for insurance policies, through which digital policies would be mandatory.
According to Irda rules, to become an insurance repository, an applicant should be a public limited company, with a minimum share capital of Rs 5 lakh. The net worth of the applicant, on grant of an in-principle approval by Irda, should be at least Rs 25 crore before a certificate of registration is issued to it.
The repositories would have to maintain records of e-insurance accounts, e-insurance policies issued, e-insurance policies reconverted into physical form, etc. Each repository would have to preserve records for at least 10 years from the date of termination or assignment of insurance.
All individual life insurance policies, including those issued to groups, and all general insurance policies held by individuals, including group policies, can be held in electronic form. Insurers are upgrading technology to adapt to the new mechanism.
