The Insurance Regulatory and Development Authority (IRDA) has mandated all life insurance companies and insurance repositories to participate in the pilot launch of the insurance repositories. The pilot launch will be for two months starting from first July 2014.
However, insurers are still divided over whether the new system will be beneficial from business and customer perspective.
Insurance repositories say that this will bring clarity to the system to make sure that every life insurer ties up with all five insurance repositories, so that customers can choose which repository’s service to avail of.
An insurance repository is a facility to help policyholders buy and keep insurance policies in electronic form instead of as a paper document. Insurance repositories will hold electronic records of insurance policies issued to individuals and such policies are called electronic policies or e-policies.
Some life insurers have tied up with more than one insurance repository, while some other insurers are yet to tie-up with all insurance repositories.
Insurers say that it is not clear what additional services will be provided by an insurance repository. At the face of it, it looks they would merely provide a platform for viewing documents, for which each insurance repository would charge a commission.
Insurance repositories will be responsible for providing mandatory information like policy status (including premium status, NAV status, bonus status, loan status, claims status, nominee status), premium due calendar and online premium payment facilitation, premium history and annual statements.
Insurers also say that there is a fear that there would be stiff competition among the insurance repositories based on the pricing mechanisms. If an insurance repository offers a better price, there would be a tendency to push a customer to get his policy digitized with that particular entity. This would be detrimental from a customer perspective.
Currently, there are more than 330 million life insurance policies and 90 million general insurance policies that are in force in the country.