IRDAI may junk physical papers, switch to e-Insurance account: CAMSRep CEO SV Ramanan

You may no longer have to dig out insurance documents from drawers and cupboards in the near future. Insurance Regulatory and Development Authority of India (IRDAI) is working on a mechanism to make issuance of policies electronically mandatory, said SV Ramanan, CEO, CAMS Repository Services.

In an interaction with Moneycontrol, Ramanan said that the regulator may change rules to ensure that policies are only issued only through the insurance repository.

"It is likely that physical policies will be disallowed. The regulator has already changed the regulations to ensure that all electronically issued policies will be stored on an e-account," he said.

Digital insurance versus physical policies 

Two million insurance policies (of 300 million in-force) have been digitised in the country. Ramanan said that most (90 percent) customers are using PAN number as an identification for opening an e-insurance account.

The insurance regulator had said that individuals can either use PAN or Aadhaar card as KYC for opening a digital insurance account. With the Supreme Court barring private entities from seeking Aadhaar, onboarding could take longer.

This is because entities like insurers and repositories cannot make Aadhaar mandatory, though customers can give it voluntarily.

e-Insurance Account

e-Insurance Account is a platform offered to policyholders to store all their policies in a digital format. This is maintained by an insurance repository which stores it in an electronic format. In addition, the repository acts as a single stop for several policy service requirements.

This e-Insurance Account will facilitate the policyholder by providing access to the insurance portfolio at a click of a button on the internet.

Each e-Insurance Account will have a unique account number and each account holder will be granted a unique login ID and password to access the electronic policies online.

The eIA services were launched in 2013 by former Finance Minister P Chidambaram. This is touted as the first such service in the world. It is estimated that insurers could save almost Rs 100 crore annually from this initiative.

Aadhaar versus PAN

Ramanan said that the Aadhaar verdict has been detrimental because they were planning to use e-KYC for digital onboarding.

"But customers can give their consent to an entity like us to fetch information based on their Aadhaar number. Using e-KYC is easier than  other methods," he added.

Earlier, once the Aadhaar number was quoted, companies could access the Unique Identification Authority of India (UIDAI) database to get the name, contact details and address of a prospective customer verified.

“We have 40 percent share of the 2 million policies digitised. However, it continues to be a push from the distributor and the insurers," said Ramanan.

The current laws

Insurers have complained that customers demand a physical policy even after receiving an e-policy. This doubles the costs for insurers, since they already pay fixed annual charges for the electronic issuance of the policy. For customers, it is free.

Ramanan said IRDAI may also bring out awareness campaigns to show why customers don’t need a physical policy.

Currently, insurers' cost per policy on an annual basis is Rs 30 once it is digitised. According to estimates, about Rs 150-200 per policy is spent by insurance companies annually in maintaining policies in physical form.

In its guidelines on insurance repositories and electronic issuance of insurance policies, IRDAI has said that term insurance policies with annual premiums above Rs 10,000 or sum assured of Rs 10 lakh will have to be digital. In general insurance, all retail motor policies are required to be available in a digital format.