Companies

LIC ties up with repositories to digitise insurance policies

Deepa Nair Mumbai | Updated on August 21, 2014 Published on August 21, 2014

While the facility is free for policyholders, insurers are required to bear the cost of digitising policies with the repository.







In order to comply with the insurance regulator’s norm on dematerialisation — digitisation — of life insurance policies, Life Insurance Corporation (LIC) on Thursday tied up with all five insurance repositories.

According to industry sources, LIC’s top brass met officials from insurance repositories to discuss the issue and sign a non-disclosure agreement. The facility will initially be piloted in Mumbai and may be extended across the country, they added.

The Insurance Regulatory and Development Authority (IRDA) has licensed Karvy, NSDL Database, Central Insurance Repository, SHCIL Projects, and CAMS Repository Services as repositories. IRDA had launched a two-month pilot project in July, making it mandatory for all life insurers to convert a minimum of 1,000 or 5 per cent of the total individual policies issued.

Cost concerns

The benefit of holding policies electronically is that there is no risk in losing the physical document. Also, policyholders can pay premiums and renew policies online. While the facility is free for policyholders, insurers are required to bear the cost of digitising policies with the repository.

LIC has been uncomfortable with the proposal, citing the costs involved in transferring its huge policy base.

SV Ramanan, CEO of CAMS repository, said LIC’s move would be beneficial to the industry and repositories have been working with the insurer to test and integrate data systems.

At present, the five insurance repositories have over 100,000 e-insurance accounts and around 20,000 policies in dematerialised format. “In the last month-and-a-half of the pilot a lot of inertia has gone away from insurers in terms of setting up systems and databases for the transition,” said Viiveck Verma, ED, Karvy Insurance Repository.

“We are seeing customers and insurance companies reacting favourably. The insurers’ concern was not really the cost involved in digitising policies but the value in the process. However, we have addressed their concerns,” he added.

Published on August 21, 2014
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