Insurance companies are gearing up to issue e-insurance policies in the near future in order to create a paperless environment in the industry. Insurance Regulatory and Development Authority (Irda) has recently clarified in its regulation on insurance repositories and said that insurers can enter agreements with one or more repositories.
The objective of creating an insurance repository is to provide policyholders a facility to keep 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. Policyholders have an option to choose to either digitise their policy or to have it in the existing format.
Rajesh Relan, Managing Director and Country Manager, PNB MetLife India said, “The guidelines on digital insurance repository and e-issuance of policies have been further streamlined through the clarifications issued recently. We believe that this will benefit both the customers and organizations increasing efficiency and convenience. At PNB MetLife we are already maintaining a digital database of all insurance policies and have also migrated to the use of Mudrank (digital stamp instead of paper ones).”
As per Irda rules, an applicant, to become insurance repository, should be a public limited company with a minimum share capital of Rs 5 lakhs. Further, the net worth of the applicant, on grant of in-principle approval by the Authority, should be at least Rs 25 crore before issuance of certificate of registration to it.
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 policyholders and their nominees / assignees / beneficiaries in the respective life insurance policies, among others. Further, they also have to maintain history of claim data.
Each insurance repository is needed to preserve records and documents for a minimum period of ten years from the date of termination or assignment of insurance. They also have to put in place provisions to maintain and safeguard privacy of data. All individual life insurance policies including health and pension policies including those issued to groups issued by registered life insurance companies with Irda, all general insurance policies held by individuals including groups policies are eligible to be held in the electronic form.
Insurers, meanwhile, are enabling process to get the system up and running. Relan added that they have the capability to issue the policies digitally and are working with the certified vendors to provide this option to customers at the earliest.
Similarly, Sanjay Tripathy, Senior EVP, Head Products, Marketing and Direct Channels, HDFC Life said that this will lead to real-time access to insurance policies. HDFC Life is currently building the back-end and gearing up to launch as and when the regulator gives a go-ahead.
“They would be able to retain all policies in electronic form and can undertake modifications with speed and accuracy. Once a customer has an account with a repository, he/she would be able to purchase subsequent policies from any insurer without the hassle of submitting KYC documents (address, identity proofs etc) again. Electronic format would also enable quick retrieval of policies leading to faster claim processing,” he said.
Irda has granted in-principle approval to five entities to enter insurance repository business. However, these companies have not yet launched operations. A senior official with one of the companies that they have received in-principle approval and would be granted the licenses. “We would launch operations within the next few months,” the official said.
