Chidambaram pushes for e-insurance initiatives
Union Finance Minister P Chidambaram who launched Insurance Repository (IR) system here on Monday underlined the need for making digitization of all...
Underlines the need for making digitization of all insurance policies a mandatory exercise
Hyderabad: Union Finance Minister P Chidambaram who launched Insurance Repository (IR) system here on Monday underlined the need for making digitization of all insurance policies a mandatory exercise. Appreciating the regulator Insurance Regulatory and Development Authority (IRDA) for taking up the IR initiative, the Finance Minister said it was a novel idea for the country though not a new initiative around the world. “This should have been done long back, but I am happy that today all the insurance companies, both life and non-life, are supporting the IR initiative,” he said.
This Insurance Repository system will enable policy holders to buy and keep insurance policies in dematerialized or electronic form called e-policies. This process will eliminate paper and associated risk of losing the documents during the natural calamities or otherwise. “We are starting the initiative in a modest way with the life insurance policies. There is a need to extend this facility to non-life policies at the earliest,” Chidambaram said.
Pointing out that the feature was being offered on voluntary basis now, he urged the IRDA officials to make the exercise mandatory. “Eventually, all the insurance policies – both life and non-life – should be digital form,” he said. IRDA should draw up a timeframe to achieve this goal, he added.
Besides making insurance activity hassle-free, the IR system will also reduce the cost involved in servicing the insurance policies. “At present, companies are spending close to Rs 150 annually towards maintenance of each policy. This will come down drastically to Rs 20,” the Minister maintained.
Referring to recent floods in Uttarkhand, he asked insurance companies to set up camps in the flood-ravaged areas and settle the claims as soon as possible. “People do lose insurance documents during such calamities, but initiatives such as IR would come to the rescue of such people,” the Minister explained.
The IRDA has given licence to five companies which will act as Insurance Repositories. They include NSDL Database Management, Central Insurance Repository, SHCIL Projects, Karvy Insurance Repository and CAMS Repository Services.
According to the insurance regulator, a policy holder who wants to convert existing paper-based policies into electronic form, will have to submit a request for conversion after opening an e-insurance account. Once a person has an e-insurance account, he doesn't have to go through the KYC process every time he buys a new policy. The repository will issue a unique code number to all policy holders, and policies of those people will come under that number. It maintains the history of policy details such as claims, nominees, beneficiaries and other data.
Earlier delivering welcome address, IRDA Chairman T S Vijayan pointed out that insurance penetration was abysmally low in the country at 3.96 per cent as compared with 6.5 per cent in developed countries as of the year 2012. “There is a need to increase insurance penetration in the country and we are making concerted efforts towards that endeavour,” he said.
Karvy is well positioned in terms of technology, operations, service network and marketing capability to run Insurance Repository business with the benefit of low cost and huge geographical reach
- C Parthasarathy, Chairman, Karvy Group
The launch of the insurance repository by IRDA paves the way for customers to easily access and manage their policies. Importantly, it also allows insurers easier means to drive KYC norms and increase the penetration levels in the country
- TR Ramachandran , MD & CEO, Aviva Life Insurance
With this facility we are looking at a significant drop in the cost of policy issuance while at the same time increasing efficiency and further reducing ambiguity in the process
-Yashish Dahiya, CEO, Policybazaar.com