The Regulator is planning to dematerialize the policies with an annual premium of Rs.50,000 for life insurance and Rs.10,000 for motor and health insurance.
The decision has been taken in lieu of the fact that despite running a pilot in June where life insurers had to dematerialize a minimum number of policies for their technical readiness, only around 2.5 lakh e-insurance accounts have been created.
According to COO of SHC
IL Insurance Repository Pandula Sreelakshmi ,” The insurance ordinance promulgated by the government in December specified that insurers will have to issue policies above a certain threshold in terms of sum assured and premium in electronic format.”
T. S.Vijayan, Chairman (IRDA) adding to the cost factor said that the cost of insurerslying up with repositories is an issue and the regulator is trying to build consensus on it. He said that repositories need to bring down costs if the model has to be accepted by insurers. According to industry sources, smaller repositories which created very few e-insurance accounts have been considering winding up.
G. V. Nageswara Rao, MD & CEO of National Securities Depository said that while multiple repositories promote competition, all the repositories have to recover their cost of investment which is hampered by limited volumes. As per S. V. Ramanan, CEO, CAMS Repository the benefits of having dematerialized insurance accounts will accrue when there is large traction from insurers who are awaiting a clear mandate from the insurance regulator.
