Paperless insurance may gain traction
Paperless insurance is soon to gain traction in India with the largest insurance insurance company in India, the Life Insurance Corporation of India (LIC) tying up with all five insurance repositories for offering policies in a digitised format.
After a lukewarm response from the industry, the process is expected to pick up speed with insurers now beginning to tie-up.
After a meeting with officials from all the insurance repositories here today, sources said that LIC has formally told them that the process has gone live. While pilots were on at LIC for the past few weeks, it has now been decided that they will begin offering it to existing customers.
For new customers, this service will first be offered to the Mumbai division and would later be extended to other regions. LIC is expected to digitise atleast 5,000 policies in the next 10 days. August 31 is the deadline for the pilot launch.
S V Ramanan, chief executive officer of CAMS Repository Service (CAMSRep) explained that with LIC coming on board, the process of converting physical policies into demat format will be quickened.
"Several policyholders had an LIC policy apart from policies from private life insurers. Now that there is clarity, several more accounts will be opened since it will be convenient for policyholders to have all policies in an electronic form," he said.
Earlier, LIC had expressed some concerns against tying with the repositories over the huge costs that had to be incurred. While Irda has made e-Insurance free for customers, officials said that it may become chargeable after few quarters.
In order to increase the pace of insurance digitisation, Insurance Regulatory and Development Authority (Irda) had all life insurers and Insurance Repositories (IRs) to participate in the pilot launch. The pilot launch will be for duration of two months with effect from July 1, 2014.
During the Pilot launch, each life insurer have to convert a minimum of 1000 or 5 % of the existing individual policies (issued in hard form and currently in force) whichever is less for each of the IRs into electronic form. This will be however subject to a minimum of 250 policies per IR.
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 have indicated that non-life policies like health and motor would also be allowed to be digitised in the future. The life insurance industry issued about 3.81 million policies in the period between April 1, 2014 and June 30, 2014.
At present, five companies including NSDL Database Management Limited, Central Insurance Repository Limited, CAMS Repository Services Limited, SHCIL Projects Limited and Karvy Insurance Repository Limited have been registered as insurance repositories.
Ramanan said that till now, the repositories have opened 1,50,000 e-Insurance accounts of which CAMSRep has 85,000 accounts. He added that there have been 20,000 policy credits or requests for conversions among other service requests.
In the absence of an underlying agreement between the insurer and the IRs, Irda has said that the fee structure shall be as mutually agreed for the pilot launch.
But, the maximum charge has been fixed at Rs 60 for e-Policy Issuance (New policy) payable by insurer to IR. For an e-Policy Conversion (Existing policy), the maximum cap on charges is Rs 40 payable by insurer to IR.
A senior official from a large insurance repository said that several private life insurers were in a wait-and-watch mode.
"While we understand that customers have not begun to contact insurers since there is very low awareness about the new system, insurers were waiting for large companies to tie-up. Now that the major ones have signed agreements, other insurers will follow suit," he said.
Irda has said that during the pilot launch, an insurer will not deny any request for electronic policy-both for conversion of existing policies and for issuance of new policies from any of the policyholders. Five companies have been given licensed to become IRs.
Industry officials said that while almost all life insurers have tied-up with repositories, issuance of policies in an electronic format has been slow. Policyholders have not begun to receive intimation from insurers giving them the facility to convert their policies. This is expected to take another 2-3 months.
"The mandatory policies will be issued first and then we will make an active effort to reach out to customers. Existing customers as well as new customers will be targeted simultaneously," said the chief distribution officer of a private life insurance company.
The insurance regulator has envisaged that in the next five years, all insurance policies would be stored in a digital format. While this has not been formally announced, it is expected that policies will annual premiums of above Rs 25,000 could be mandated to be stored digitally from next fiscal onwards.
For the policies converted/issued in electronic form, within an e-Insurance Account, the IR would be responsible for providing mandatory information like policy Status (including premium status, NAV status, Bonus status, Loan status, Claims status, Nominee/Assignment Status, etc), premium due calendar and Online premium payment facilitation, Premium History and Annual statements.
There is also a fear that there would be stiff competition among the IRs based on the pricing mechanisms. "If an IR offers a better price, there would a tendency to push a customer to get his/her policy digitised with that particular entity. This would be detrimental from a customer perspective," said an insurance industry expert.
Presently 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 1800 million pages annually and save more than Rs 100 crore for the industry.
How an insurance repository works:
A customer goes to a repository website and enters his/her information. An e-Insurance account is created free of cost for the customer (where the insurer pays for these expenses)
An e-Account number is generated for each customer, which is a unique id. Each user can only open one account.
All KYC related information is fed into the account. Hence, when he/she buys a new policy, only the e-Insurance account number is to be quoted and no separate KYC document is required. Aadhaar number is most convenient.
All future policy details are immediately sent from an insurer to the insurance repository in a digital format. All payments and policy-details can be viewed on this one common platform by users
Agents can also view details of policies that they have sourced on this common platform.
Premium reminders, renewals and other policy-details can be viewed on this platform
If a customer has some policy-related queries or complaints, the same e-Insurance account can be used to communicate with the insurer
Each user can have an Authorised Representative who can have details of the e-Insurance account. In case of death of the user, this representative will be able to provide information about the policies.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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After a lukewarm response from the industry, the process is expected to pick up speed with insurers now beginning to tie-up.
After a meeting with officials from all the insurance repositories here today, sources said that LIC has formally told them that the process has gone live. While pilots were on at LIC for the past few weeks, it has now been decided that they will begin offering it to existing customers.
For new customers, this service will first be offered to the Mumbai division and would later be extended to other regions. LIC is expected to digitise atleast 5,000 policies in the next 10 days. August 31 is the deadline for the pilot launch.
S V Ramanan, chief executive officer of CAMS Repository Service (CAMSRep) explained that with LIC coming on board, the process of converting physical policies into demat format will be quickened.
"Several policyholders had an LIC policy apart from policies from private life insurers. Now that there is clarity, several more accounts will be opened since it will be convenient for policyholders to have all policies in an electronic form," he said.
Earlier, LIC had expressed some concerns against tying with the repositories over the huge costs that had to be incurred. While Irda has made e-Insurance free for customers, officials said that it may become chargeable after few quarters.
In order to increase the pace of insurance digitisation, Insurance Regulatory and Development Authority (Irda) had all life insurers and Insurance Repositories (IRs) to participate in the pilot launch. The pilot launch will be for duration of two months with effect from July 1, 2014.
During the Pilot launch, each life insurer have to convert a minimum of 1000 or 5 % of the existing individual policies (issued in hard form and currently in force) whichever is less for each of the IRs into electronic form. This will be however subject to a minimum of 250 policies per IR.
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 have indicated that non-life policies like health and motor would also be allowed to be digitised in the future. The life insurance industry issued about 3.81 million policies in the period between April 1, 2014 and June 30, 2014.
At present, five companies including NSDL Database Management Limited, Central Insurance Repository Limited, CAMS Repository Services Limited, SHCIL Projects Limited and Karvy Insurance Repository Limited have been registered as insurance repositories.
Ramanan said that till now, the repositories have opened 1,50,000 e-Insurance accounts of which CAMSRep has 85,000 accounts. He added that there have been 20,000 policy credits or requests for conversions among other service requests.
In the absence of an underlying agreement between the insurer and the IRs, Irda has said that the fee structure shall be as mutually agreed for the pilot launch.
But, the maximum charge has been fixed at Rs 60 for e-Policy Issuance (New policy) payable by insurer to IR. For an e-Policy Conversion (Existing policy), the maximum cap on charges is Rs 40 payable by insurer to IR.
A senior official from a large insurance repository said that several private life insurers were in a wait-and-watch mode.
"While we understand that customers have not begun to contact insurers since there is very low awareness about the new system, insurers were waiting for large companies to tie-up. Now that the major ones have signed agreements, other insurers will follow suit," he said.
Irda has said that during the pilot launch, an insurer will not deny any request for electronic policy-both for conversion of existing policies and for issuance of new policies from any of the policyholders. Five companies have been given licensed to become IRs.
Industry officials said that while almost all life insurers have tied-up with repositories, issuance of policies in an electronic format has been slow. Policyholders have not begun to receive intimation from insurers giving them the facility to convert their policies. This is expected to take another 2-3 months.
"The mandatory policies will be issued first and then we will make an active effort to reach out to customers. Existing customers as well as new customers will be targeted simultaneously," said the chief distribution officer of a private life insurance company.
The insurance regulator has envisaged that in the next five years, all insurance policies would be stored in a digital format. While this has not been formally announced, it is expected that policies will annual premiums of above Rs 25,000 could be mandated to be stored digitally from next fiscal onwards.
For the policies converted/issued in electronic form, within an e-Insurance Account, the IR would be responsible for providing mandatory information like policy Status (including premium status, NAV status, Bonus status, Loan status, Claims status, Nominee/Assignment Status, etc), premium due calendar and Online premium payment facilitation, Premium History and Annual statements.
There is also a fear that there would be stiff competition among the IRs based on the pricing mechanisms. "If an IR offers a better price, there would a tendency to push a customer to get his/her policy digitised with that particular entity. This would be detrimental from a customer perspective," said an insurance industry expert.
Presently 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 1800 million pages annually and save more than Rs 100 crore for the industry.
How an insurance repository works:
A customer goes to a repository website and enters his/her information. An e-Insurance account is created free of cost for the customer (where the insurer pays for these expenses)
An e-Account number is generated for each customer, which is a unique id. Each user can only open one account.
All KYC related information is fed into the account. Hence, when he/she buys a new policy, only the e-Insurance account number is to be quoted and no separate KYC document is required. Aadhaar number is most convenient.
All future policy details are immediately sent from an insurer to the insurance repository in a digital format. All payments and policy-details can be viewed on this one common platform by users
Agents can also view details of policies that they have sourced on this common platform.
Premium reminders, renewals and other policy-details can be viewed on this platform
If a customer has some policy-related queries or complaints, the same e-Insurance account can be used to communicate with the insurer
Each user can have an Authorised Representative who can have details of the e-Insurance account. In case of death of the user, this representative will be able to provide information about the policies.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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