E-insurance to see big numbers as LIC joins in

The initiative is expected to save more than Rs 100 crore for the industry

Life Insurance Corporation of India, the country’s largest insurer, has decided to issue digitised policies, after resisting such a move for some years.

India First Insurance launched the first digitised policy in September 2013. Less than two per cent of the policies sold in the country are in electronic format.

LIC was not keen due to the costs involved, apart from the fact that external technology was being used to digitise. Now, LIC has finally become part of the e-insurance process, where policies will be digitised through repositories. S K Roy, LIC chairman, told Business Standard that after several discussions, they’d decided to go ahead in this regard.

An insurance repository is a facility to help policy holders buy and keep 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 policies issued to individuals. These are called 'electronic policies' or 'e-policies’, held in an electronic insurance account.

It is also being proposed that all high-value policies be mandatorily in digitised form. Different insurers will have different arrangements with each repository but, on an average, the cost of digitisation could be Rs 75-80 per person. There is also an annual servicing fee of Rs 500-900. These costs will be borne by insurers.

Insurers have been engaged in active campaigns to highlight the importance of holding insurance in a digital format, which protects a policy document from damage or loss, leading to possible claim rejection. The sector regulator's estimates suggest Rs 150-200 per customer is spent by a company annually in maintaining policies in physical form. The digital initiative, pushed by the Insurance Regulatory and Development Authority of India, is expected to save at least Rs 100 crore a year for the sector.

The five insurance repository companies are NSDL Database Management, Central Insurance Repository, CAMS Repository Services, SHCIL Projects and Karvy Insurance Repository.

These repositories are required to maintain records of e-insurance accounts with a unique number, records of e-insurance policies issued and of reconversion to physical form, an index of policy holders and their nominees/ assignees/beneficiaries in the respective life insurance policies, among others. They also have to maintain a history of claim data.

Further, premier services can also be offered, on an annual or per service basis. These include a premium dues calendar and online premium payment facilitation, premium history and claims history, acceptance of service requests for onward transmission to insurers and tracking systems for service requests or grievances.
HOW TO DIGITISE A POLICY

• Fill out application policy, that can be downloaded from repository website
• Insurers also have these forms available
• Submit form with identity and address proof
• PAN number or Aadhaar number is compulsory for identity proof
• Address proof can be ration card, voter id card and passport among others
• Takes 2-7 days to open the account
• An e-Account number is generated for each customer for free
• Premiums services like online premium payment will be chargeable
• Each user can have an authorised representative for account.
• In case of user's death, representative will be able to provide information about the policies