After stocks,mutual funds and bonds in demat format,investors have got the option to keep their insurance polices in the electronic form. All individual life insurance polices,health and pension policies and group policies issued by insurance companies can be held in the demat format. The Insurance Regulatory and Development Authority (Irda) has come out with guidelines to form an insurance repository on the lines of National Securities Depository or the Central Securities Depository. The repository will be licensed by Irda and will be connected to all insurance companies. The move,experts say,will bring in benefits along the same lines seen in the equity market after regulator Sebi introduced dematerialisation of shares,which speeded up the transaction process and also reduced transaction costs for investors and eliminated fraudulent cases. It also saved investors the hassle of preserving share certificates in physical form,and the chances of losing them were completely eliminated. Irdas move will consolidate all policies under a single account and the family will immediately come to know of the policies purchased by an individual in case of an emergency and can get the insurance benefits much faster. Irda guidelines say that all insurance policies in electronic form will be treated as valid insurance contacts. The repository will have to be a public limited company with a net worth of R25 crore,a company fully promoted by either the Life Insurance Council or General Insurance Council or by both together. The insurance repository will have to put in place measures to safeguard the privacy of the data of the customer and will have to maintain the data and prevent manipulation of records and transactions. The repository will carry out all the required task under the know your customer or KYC norms and an Aadhaar or a permanent account number card will be the basis on which an e-insurance account can be opened,irrespective of the amount of premium. The repository will verify the copy of the address proof and ensure safety. It will also have the names of the beneficiary,assignees and nominees and no KYC has to be carried out for the same individual if he has an an e-insurance account and wants to buy additional insurance cover. The customer will be issued a login ID and password and a statement of account can be seen online with details of policy maturity,surrender and lapses. By keeping all insurance polices in the electronic form,it will help the investors keep track of multiple insurance polices and will help them find the date of renewal payment,maturity of the policy and also keep track of payment and bonus received, says Suresh Kapoor,an Irda-certified insurance broker. He adds that it will save crores of rupees for insurance companies. At present,insurers have to print the policies and dispatch them to policyholders and often they get lost in transit,causing inconvenience to customers. The insurance regulator has underlined that no costs of e-insurance will be collected from the account holders either by the insurance repository or by an insurer. The Irda guidelines say that the repository will have to put in place measures to avoid opening of multiple e-insurance accounts by the same policyholder. The repository will make provisions that will enable policyholders to pay their insurance premium online. The repository will have a policyholders grievances cell for resolution of complaints and if the repository surrenders its registration,it will transfer the entire data to the new repository that will be appointed be Irda. While the move is likely to benefit millions of policyholders,insurance companies feel that the their customer data can be tracked by others and many may lose their existing clients. E-insurance will be of great advantage for customers in case of health insurance,which will become portable from July 1,and they will have to just give their account number in case of any claim and can even keep track of their no-claim bonus and pre-existing disease coverage, says Ashok Das,an insurance consultant. To avoid fraudulent encashment of cash benefits,the repository will use electronic payment and in case such a facility in not available,it will print the bank account details,furnished by the policyholder,on the payment instruments like a cheque or a bank draft. If the insurance repository fails to issue the insurance policy in the electronic form within the time specified,it shall be liable to a penalty of R1 lakh for each days delay or R1 crore,whichever is less. Analysts say such a high penalty will make the repository and insurance companies issue the policy on time and bring in transparency in the way of the functioning of the companies.
