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The decision by Life Insurance Corporation, the country’s largest insurer, to maintain its own records in digitised format may force insurance repositories to either shut down or alter their business plans.
The five insurance repositories operating in the market are NSDL Database Management, Central Insurance Repository, CAMS Repository Services, SHCIL Projects, and Karvy Insurance Repository.
Incidentally, SHCIL recently decided to exit the insurance repository (IR) business. Confirming the development, Pandula Sreelakshmi, COO of SHCIL Projects, said: “We will be exiting the insurance repository business as we feel having a corporate agency licence will make more sense from a business perspective.”
“Stock Holding provides wealth management (services) across all financial products to our clients in the retail segment. As an insurance repository, we were unable to offer insurance products to our clients. With the corporate agency licence, we will be able to promote life and general insurance products very soon.” According to IRDAI, LIC has a 73 per cent market share in the life insurance segment.
SV Ramanan, CEO, CAMS Insurance Repository, said LIC’s decision to not tie up with any IR is a dampener to the repository business. Ramanan says there are about seven lakh e-insurance accounts. Of this, CAMS has a 30 per cent market share. Karvy, another repository, has about one lakh e-insurance accounts.
LIC did not respond to a BusinessLine query on the likelihood of repositories closing down.
IRDAI has asked insurers to pass on to insurance repositories only those policies that are to be issued electronically. Even here, the insurer has the option to maintain the policy in the digital format on its own.
“The market for insurance repositories has been diluted and some are following a wait-and-watch approach on exiting the business,” said a senior official of an insurance repository.
A senior official from another repository said: “It seems LIC fears that its customer database can be accessed by other insurers once it signs up with an repository. This could result in competition eating into its market share. Besides, LIC’s clients cannot buy policies of other insurers using the login ID and password provided by it as it is technically not an e-insurance account offered by an IR.”
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