In an attempt to ensure that life insurers have at least some insurance policies in a digitised format, the Insurance Regulatory and Development Authority (Irda) has asked all life insurers and insurance repositories (IRs) to participate in the pilot launch. The pilot launch will be for two months from July 1.
During the pilot launch, each life insurer would have to convert a minimum of 1,000 or 5 per cent of the individual policies (issued in hard form and currently in force) whichever is less for each of the IRs into electronic form. This will be subject to a minimum of 250 policies per IR.
Irda has said during the pilot launch, an insurer will not deny any request for electronic policy — both for conversion of policies and for issuance of new ones from any of the policyholders. Five companies have been given licences to become IRs.
An insurance repository (IR) is a facility to help policyholders buy and keep insurance policies in electronic form, rather than as a paper document. These repositories, such as share depositories or mutual fund transfer agencies, will hold electronic records of insurance policies issued to individuals and such policies are called electronic policies or e-policies.
For the policies converted/issued in electronic form, within an e-insurance account, the IR would be responsible for providing mandatory information like policy status (including premium status, NAV status, bonus status, loan status, claims status, nominee/assignment status), premium due calendar and online premium payment facilitation, premium history and annual statements .
IRs have been asked to submit a fortnightly report on digitisation of policies starting from July 16. Any entity not participating in the pilot will be subject to regulatory action by Irda.
In the absence of an underlying agreement between the insurer and IRs, the fee structure shall be as mutually agreed for the pilot launch. But, the maximum charge has been fixed at Rs 60 for e-Policy Issuance ( New policy) payable by insurer to IR. For an e-Policy Conversion ( Existing policy), the maximum cap on charges is Rs 40 payable by insurer to IR.
Presently there are more than 330 million life insurance policies and 90 million general insurance policies that are in force in the country. On an average, Irda’s estimates suggest that annually Rs 150-200 per customer is spent by an insurance company annually in maintaining policies in physical form. This initiative by Irda is expected to 1800 million pages annually and save more than Rs 100 crore for the industry.