Sunita reached out to my team for help with her insurance policies. She has over 25 policies bought over the last 15 years. Like most women, she only invested only in gold and investment-linked insurance plans. Most of the policies held are life insurance plans and she has motor and health insurance too. The general insurance policies are in her husband’s name. While her prime purpose in connecting with us, was to check about the performance of the policies, we asked her how she manages the policies.
Given that the policies are taken at different time periods, she relied on the reminders that she gets from the insurance companies for premium payments. In fact, it took her considerable time to collate all the policy information as some were in children’s names and she had misplaced some documents. With 25 policies, it wasn’t surprising that policy documents had been misplaced. Sunita also wasn’t sure if she had received payouts in form of bonus or moneyback in her account. Generally, I find policyholders give different bank account details each time they buy a policy or forget to update address in case they move house.
The solution to Sunita’s problem and that of many other policy holders is to have an E-insurance account.
What is an e-insurance account?
An E-insurance account enables policy holders to hold their life insurance and general insurance policies from multiple insurers, in an electronic form. This means they no longer need to keep physical documents pertaining to the policies. An insurance repository holds the records of the policies just like a depository holds details of shares held by an individual.
Being able to hold shares and mutual funds in electronic form has made life easier for investors and e-insurance too has many advantages. The foremost being all insurance policies would be in one place and there would not be a chance of losing policy documents. A single account can be created for the family and the service is free for policy holders. Furthur, transactions like change of address or bank account details can be done online and policy benefits like moneyback or maturity benefits will automatically get credited to the registered bank account of the policy holder. With the feature of premium payment reminders or policy maturity alert, policyholders can monitor their policies easily.
DigiLocker holds insurance policies too, but you cannot transact
Insurance policies can also be held electronically in DigiLocker but E-insurance accounts have more benefits for the insured. DigiLocker allows the insured to view policy documents but not transact. Policy servicing facilities like claims, premium payment, change of nominee or demographic details like address cannot be done on DigiLocker.
Room for improvement
While the e-insurance account has many benefits, there are some issues that need to be worked on. The first is the need to do the KYC. Even if one has a KYC for mutual fund investments, this cannot be used by insurance repositories. Investors get put off by having to upload documents again and again. This is also why they prefer to stay with physical documents.
Second, at present the premium payment takes the investor to the insurance company website, which the policy holder can do themselves. However, one of the 5 insurance repositories, CAMSRep is working on providing a seamless payment link through a policy holder’s bank account directly.
Penetration of e-insurance is very low due to lack of awareness. Both the regulator and the insurance companies should push for the adoption of e-insurance as it is beneficial the policy holder, not to mention the saving on costs of printing & mailing the policy document. In every financial services product, there has been a pushback by stakeholders to adopt technology even though it leads to betterment of all. Agents too need to view technology as an enabler and not a threat.
FY21 was all about getting basics in place on finances. FY22 should be about making financial life simple and minimal. An e-insurance account is a step in that direction.