- Date : 03/11/2015
- Read: 7 mins
The Insurance Repository System was formally launched in India by IRDA on 16th September 2013 to provide better services to policyholders as well as to enhance insurance penetration. Currently five entities have been licensed by the regulator to act as insurance repositories.
In an interview with Sanjeev Sinha, Mr Subbarao Mukkavilli, executive director, Karvy Insurance Repository, talks about the concept of insurance repository and shares his views on how e-insurance can be given a boost. Excerpts:
What is an insurance repository?
An insurance repository is a facility which allows policyholders to digitize their insurance policies or, in other words, hold their policies in a demat form.
The objective of creating insurance repositories was to help policyholders keep their insurance policies in electronic form and to undertake changes, modifications and revisions in a policy with speed and accuracy. This was aimed at bringing about efficiency, transparency and cost reduction in the issuance and maintenance of insurance policies.
After opting for this facility, policyholders can access their policies any time from their computer, mobile and tablet, and can also track the policy details, make renewal payments and initiate service requests.
What was the need for setting up insurance repositories in India?
During the last 5 years, the insurance sector has witnessed de-growth and has been reeling under severe cost pressures. During the last 3 years, life insurance companies have taken several measures to control cost, like shutting down branches and rationalizing expenses. Growth has been further restricted due to the following issues involved in the business development and acquisition of new clients:
- Multiple KYC collection hassles
- Storage, print and policy dispatch costs & policy return to origin management o Fraud o Inadequate visibility of customers' background / requirement to underwriters o Claims management o Branch / Front office reach o Lack of proper customer profiling
- Low persistency
Policyholders are also facing the following challenges:
- Multiple KYC
- Maintaining multiple physical policies
- Mutilation / lost doc
- Separate medical tests o Contact updation
- Claim intimation
The above factors have put further strain on the growth engine of the insurance industry and slowed down its pace of development. To recover from the current situation, the insurance industry needs several reforms. Given below are some of the key requirements of the industry:
- Low fixed costs / cost variabilization
- New delivery and support channels
- Market penetration at lower cost
- Support on technology innovation
- Focus on business development
- Common market infrastructure
- Cutting costs
- Having pooled resources
- Improving service standards
- Concentrating on policyholder life cycle
How can someone open an e-insurance account? What if one has policies from different insurers?
Opening an e-Insurance account is very simple. Policyholders can walk into any of the front offices of insurers or repositories and submit an application for eIA. They need to submit the proof of ID and the proof of address along with a photograph. In the application form, they can also mention the choice of their repository. Within 8 to 24 hours of submission, account holders will receive OTP on their registered email ID and mobile. They just need to follow the instructions provided in the message and access their web portal. Some insurance repositories also offer facilities to submit their application online.
How does an e-Insurance account compare with a demat account or other such accounts?
Although the basic functionality of both the accounts is the same, an e-Insurance account offers a plethora of online services across multiple insurance companies, such as:
- Digitization of policies
- Portfolio access
- Single window registration and resolution of complaints, queries and service requests
- Sending renewal alerts
- Audio visual policy dockets with hyperlinks
- Management of authorized representatives
- Renewal payment options
What are the pros and cons of holding insurance in a digital format compared to keeping policies in physical form?
Once a policy is converted into a digital form, the physical policy becomes null and void. Thereafter, the entire communication switches into an electronic mode and the accessibility becomes 24/7. This facility offers safe and secure custody of policy bonds along with providing the convenience of availing various services online.
True, some people are comfortable with keeping their policies in physical form. However, the world is changing fast. Even for buying a movie or a railway ticket, people these days are seen preferring online channels and a paperless environment. Moreover, every year, lakhs of trees are cut to make paper. By opting for digitization, one can contribute to the mother environment also.
What are the costs involved in putting and keeping policies in digital form compared to keeping them in physical form? What different types of fees would a policyholder, who wants to keep his policies in electronic form, be required to pay
While the basic services are offered free, a policyholder can opt to avail advanced services by paying annual fees. Although the exact fee is not finalized, it would be comparable to the prevalent annual cost of depository/PF accounts. This amount is insignificant when compared to the convenience, time savings and fuel savings the policyholders get.
How many insurance repositories have been set up in India till now?
IRDAI has issued licences to 5 insurance repositories, viz, NSDL, CDSL, Stock Holding Corporation, Karvy and CAMS.
How should one choose the right one? What are the criteria for choosing the right insurance repository?
Insurance repositories are expected to provide convenience to policyholders through multiple touch points. These include: # Availability of branches/ service centers across India, # Availability of user-friendly websites and mobile platforms for transacting. # Help desks for customer services for activities like change of contact information, registration of queries, complaints, requests and even claims.
In addition to the above, insurance repositories also need to have agreements with all/most of the insurers.
According to news reports, more than a year on, e-insurance is still to catch up in India and less than 10% of all policies in the industry have been digitized. Your comments? What measures can be taken to give e-insurance a boost?
In any initiative that covers the length and breadth of the nation, implementers grapple with multiple challenges on awareness, management change and so on. Aadhaar and the depository system are classic examples.
It took close to a decade for the depositories to bring a critical mass into the system.
During 2014, IRDAI had announced the pilot period for 3 months. 90% of the existing conversions happened during that period. Given the fact that conversions were largely driven by the word of mouth, it can be considered as a significant number.
Most of the private life insurers have benefited from it and are recommending a mass scale implementation by making eIP mandatory. IRDAI is also taking several initiatives in this direction to propagate the concept. The following initiatives will propel the adoption of insurance repository in India:
1. Alignment with Digital India Initiatives
2. Making e-Policies mandatory for the following segments:
a. All policies of Employees of Insurance Companies, b. All policies of Insurance Agents / Channel Partners, c. NRI Customers, d. HNI Customers,, e. All Online policies, f. Orphan policies (Policies sold through agents who have been terminated), g. Policies in the location where insurance companies do not have presence, h. Old policies where KYC details are obsolete or contactability is an issue, i. Policies due for maturity during the coming 2 years, j. All motor policies, k. All health policies.
Do you think making digitized policies mandatory will serve the purpose?
It is a resounding Yes! Mobile penetration in India is faster than our thoughts and policy holders are smarter than what we can imagine. An average Indian citizen has the highest level of adaptability. We have experienced the same trends in Aadhaar uptake. Insurance repositories are no exception.