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Wednesday, September 4, 2013

Take it easy policy... the 'e (insurance) policy - Insurance Repository

Daily we  hear a lot about ‘E-business’ and ‘E-selling’…. There are many online portals enabling buying and selling of virtually everything faster and quicker….  E-business (electronic business), derived from such terms as "e-mail" and "e-commerce," is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.  What is good for one may not work for other and not all success can be replicated in the same manner !

For long in many of their presentations Insurance speakers – used to start telling – while all others sell products – we sell paper that carries promise….. and that is now hit !  ~ here comes ‘e-Insurance Policies’……………….it is not about selling or buying through internet, which already exists….. it is about ‘physical document vs e-document’….. 


With the World steadily moving towards using less paper and to electronic records, especially financial records – insurance policies also would be in electronic form.  IRDA has issued guidelines relating to insurance repositories and electronic issuance of insurance policies. According to the directions of IRDA, one can :

v       Maintain, store and retrieve policies and the information in them easily
v       One can modify or revise their 0wn insurance policies with speed and accuracy

Most of us are fond of that yellow metal – women buy gold jewellery while men would strive to buy a gold coin. e-gold (deliberately spelled with a lower-case 'e') was a digital gold currency operated by Gold & Silver Reserve Inc. under e-gold Ltd. that allowed users to open an account on their web site denominated in grams of gold.  Now there are many others who offer ‘gold in e form’ and you can buy e-gold in India too….  Now no one debates on   physical gold versus gold exchange-traded funds [ETF] and now e-gold is the crowning glory.  Some financial analysts say that e-gold is providing better returns than gold ETFs too.

Getting back to Insurance, IRDA the Insurance regulator has granted license to Five companies to act as Insurance repositories, till  July 31, 2014. The five companies  are : NSDL Database Management Limited, Central Insurance Repository Limited, CAMS Repository Services Limited, SHCIL Projects Limited and Karvy Insurance Repository Limited. Irda has clarified that insurers can enter into agreements with one or more repositories.

Those who have had shares will remember those days of the physical format – the problems in keeping them properly, physical delivery or transfer in their names et al. ~ all things of past. With the onset of Insurance repositories, the policy holders can keep insurance policies in electronic form. Policyholders will have the option to choose to either digitise their policy or to have it in the existing format.

These repositories are required to maintain records of e-insurance accounts with Unique number, records of e-insurance policies issued and records of e-insurance policies converted back into physical form, index of policyholders and their nominees / assignees / beneficiaries in the respective life insurance policies, among others. Further, they also have to maintain history of claim data.

An Insurance Repository is a facility to help policy holders buy and keep insurance policies in electronic form, rather than as a paper document. Insurance Repositories, like 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”.

A policy holder needs to open an e Insurance Account (e IA) with one of the Insurance Repositories [just as you have for holding  Shares and Mutual Funds in e-format] to be able to buy and keep policies in electronic mode. An individual can have only one e IA with any one of the Insurance Repositories. Once an e IA is opened, the account holder can buy and keep all his electronic insurance policies – be it life, pension, health or general - issued by various Insurers under this single account.  Each e IA will have an unique e Insurance Account number; the account holder should quote this number in all correspondence with Insurance Repository. Each account holder will also get an unique Login ID and Password to access his account and electronic policy details online on the insurance repository website.

Policy holders can choose the form in which they want their policies issued - paper or electronic. A policy can be bought or maintained in one form only - either in electronic form or paper but not in both. However, a policy holder can choose to keep some policies in electronic form and others in paper form - only the electronic policies will be reflected in his e IA account and he can use repository services only for the e policies (and not the paper policies)
Some of the benefits could be :
•        Safety: No risk of loss or damage as may happen with paper policies;
•        Convenience: You can access all your electronic policy details online
•        Less Paper work: Your documentation is much simpler

Now for the most important aspect ……. The price or cost involved ~ Read from CAMS web that ‘it is free’ – yes - Opening an e IA and maintaining e-policies is absolutely  Free for the policy holder.  The Repositories would be paid by Insurance Companies.

Presently,  following types of insurance policies are eligible to be held in electronic form:
a.       All individual life insurance policies including health and pension policies. Policies issued to groups by registered life insurance companies can also be held in electronic form.
b.       All general insurance policies held by individuals including group policies
c.       Any other class of insurance policies that may be notified by IRDA u from time to time

However, initially, only life insurance policies can be held in electronic form under an e IA. Over time, this facility will be extended to general insurance policies as well.

Qs :

1)    no answer if you are to ask how one would show Certificate of Insurance to a Traffic Police
2)    how to present Marine COI to Customs or other authorities
3)    how to submit COI to bank which has issued Letter of Credit

It may not be an instant hit in General insurance, where the physical document is not always required – in property policies, submission of original policy is not a pre-requisite.

With regards – S. Sampathkumar

4th Sept. 2013.

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