Insurance repositories can help industry save over Rs 2,000 crore a year

NEW DELHI: Insurance repositories can help life insurance companies save an astounding Rs 2,000 crore every year on new policies alone. An insurance repository is like a demat account for insurance policies. It costs a life insurance company roughly Rs 600 a year to service a physical policy. “But if the policy is held in an e-insurance account in electronic form, the cost can be brought down to Rs 80-100 a year,” says S.V. Ramanan, CEO of Cams Repository. The saving of Rs 500 per policy means that the industry stands to cut costs by Rs 2,000 crore on the estimated 4 crore policies it issues every year.

The savings can be significantly higher if the 37 crore existing life insurance policies are converted into electronic form and stored in e-insurance accounts. Even if 10% of customers switch to electronic format in the first year, it will translate into savings of Rs 1,850 for life insurance companies. This could well translate into lower life insurance premiums as companies pass on the benefit to customers.

While insurance companies will certainly gain, even policyholders stand to benefit from the launch of insurance repositories in India. If your policies are stored in electronic form, you don’t run the risk of misplacing the physical documents or losing them in a calamity. “In the Uttarakhand tragedy, the claims procedure would have been very smooth if the insurance policies were stored electronically,” points out Ramanan.

Also, it will become easier to track your policies as the details will be available at one place. Even the paperwork will reduce, because the repository will act as the single point of service, updating policy details like change of address or nomination will become easier, faster and more reliable.

The best part is that there is no cost involved for the policyholder. Policyholders can open an e-insurance account for free with any of the five entities approved by the Insurance Regulatory & Development Authority. “There are absolutely no charges to be paid by policyholders. Their insurance companies will pick the bill,” says Ramanan. Right now only life insurance policies can be stored in e-insurance accounts but talks are afoot to extend the facility to other policies such as medical, home, travel and car insurance.