ET Bureau MUMBAI: All individual non-life insurance buyers paying a premium of Rs 10,000 or more will have their policies in dematerialised form, while the cut-off amount for life policies will be Rs 50,000, according to a new proposal initiated by the insurance regulator.
At present, insurers are not offering buyers of non-life insurance policies the option to hold a policy in electronic form. But life insurance policy buyers can choose to buy policies either in physical or electronic form. As a pilot project, the insurance regulator has mandated life insurance companies to issue a small portion of the policies in electronic form.
Senior officials, who did not wish to go on record, said that Insurance Regulatory and Development Authority of India (Irda) has sought the views of insurance companies and insurance repository companies, which provide a demat facility to insurance policies.
“To begin with, the regulator wants motor insurance policies with premiums of above Rs 10,000 to be issued in electronic form. Similarly, the cut-off for life policy isRs 50,000,” said officials from the insurance industry. Insurance repositories are similar to depositories in the capital market. Just as an investor needs to open a one time depository account, the repository requires policyholders to open an e-insurance account.
Irda has issued a licence to NSDL Database Management, Central Insurance Repository, SHCIL Projects, CAMS Repository Services and Karvy Insurance Repository to provide repository services. The regulator has also directed insurance companies not to charge policyholders to encourage customers to hold policy in electronic form. The insurer pays Rs 40 to Rs 60 per policy to the repository. Country’s largest life insurer Life Insurance Corporation of India, which has 70% market share, is opposed to participating in a repository. In a letter to Irda, the corporation has said that it would have to incur an expense of nearlyRs 2,000 crore to convert all physical policies into electronic format. “LIC has already digitised 30 crore policy records.
Everything is in a soft file. So, for LIC, it's not a problem to give service online. A customer can view premium payment dates, pay premium online, register complains online. “Looking at it conceptually, it’s a good idea. But putting the system in place, building the processes and then taking it forward will take time. If I join for my online customer, the offline customer will pay, so we can’t crosssubsidise,” SK Roy, chairman, LIC, had told ET last November.
At present, insurers are not offering buyers of non-life insurance policies the option to hold a policy in electronic form. But life insurance policy buyers can choose to buy policies either in physical or electronic form. As a pilot project, the insurance regulator has mandated life insurance companies to issue a small portion of the policies in electronic form.
Senior officials, who did not wish to go on record, said that Insurance Regulatory and Development Authority of India (Irda) has sought the views of insurance companies and insurance repository companies, which provide a demat facility to insurance policies.
“To begin with, the regulator wants motor insurance policies with premiums of above Rs 10,000 to be issued in electronic form. Similarly, the cut-off for life policy isRs 50,000,” said officials from the insurance industry. Insurance repositories are similar to depositories in the capital market. Just as an investor needs to open a one time depository account, the repository requires policyholders to open an e-insurance account.
Irda has issued a licence to NSDL Database Management, Central Insurance Repository, SHCIL Projects, CAMS Repository Services and Karvy Insurance Repository to provide repository services. The regulator has also directed insurance companies not to charge policyholders to encourage customers to hold policy in electronic form. The insurer pays Rs 40 to Rs 60 per policy to the repository. Country’s largest life insurer Life Insurance Corporation of India, which has 70% market share, is opposed to participating in a repository. In a letter to Irda, the corporation has said that it would have to incur an expense of nearlyRs 2,000 crore to convert all physical policies into electronic format. “LIC has already digitised 30 crore policy records.
Everything is in a soft file. So, for LIC, it's not a problem to give service online. A customer can view premium payment dates, pay premium online, register complains online. “Looking at it conceptually, it’s a good idea. But putting the system in place, building the processes and then taking it forward will take time. If I join for my online customer, the offline customer will pay, so we can’t crosssubsidise,” SK Roy, chairman, LIC, had told ET last November.
(Your legal guide on estate planning, inheritance, will and more.)
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