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Holding insurance in electronic form has benefits other than safe-keeping, says the CEO of CAMS Repository Services

A change in electronic insurance guidelines will make electronic insurance policies much more customer-friendly. SV Ramanan, CEO, CAMS Repository Services, explains the ins and outs of e-insurance accounts.
We hear that insurance repositories need not necessarily tie up with all insurers. How will this help policyholders, since they are allowed only one electronic insurance account?
The original guidelines issued by IRDA mentioned that all insurance companies should have a tie up with all insurance repositories. But at the time of going live, IRDA made a concession that the insurer can decide whether or not to participate. And if they decide to participate, they can go with one or more insurance repositories. But come July 1, all insurance companies have to tie up with all insurance repositories; it is going back to the original guidelines.
What are the benefits of electronic insurance?
Unlike a typical product or service which is going to be priced to a policyholder, this is a free of cost service. And, in life insurance, where the term of a policy is 15-20 years, we hear people moan that they’ve kept their policy document so safe they don’t know where it is! This is where the need to de-mat starts. Keeping the policy safe, means not safe just for retrieval and use later, but safe from insects, from floods and other accidents.
Also, at the time of claim as, the policyholder won’t be there, the nominee should know where the policy is. Today, there are thousands of crores of unclaimed money with insurers, simply because the family doesn’t know about the policy taken.
When you keep it electronically, there is a concept called an “authorised representative”, who will have access to the account when the policyholder is not there, who will know the number of policies the person has.
This representative is like the executor of a will. Also, given that today people often shift residences, they have to keep updating their KYC details. But when you have an e-insurance account, you need to make the change at a single point and all the insurers will get the update.
And finally, with an e-insurance account, you access all policy details across insurers and transact – such as surrender, partial withdrawals and fund switches − using a single user id and password.
In the case of ULIPs, will you update the NAV?
In the first phase of launch, the daily NAV is not going to be part of the insurance repository. When they log in into their account, they can view their holdings, know the total sum assured, and the surrender value at any point in time. But day-to-day NAV computation is not part of the scheme. This is to educate the investor that ULIPs are not an insurance product, but an investment product.
How safe is a policyholder’s account? Can the agent or someone else operate it without the knowledge of the account holder?
The five repositories which have been chosen by IRDA have a history of maintaining data confidentiality. Also, repositories are custodians and guardians of the account, but there is no power to take decisions on behalf of the policyholder.
When you say electronic, does it mean that I will have no physical policy document?
There will be no paper at any point of time. Today, if you invest in a mutual fund, you don’t get any physical certificate of holding. It’s in your account and against your name.
Similarly, for redemption, you sign a redemption form and the money comes to your account. In NPS, too, everything is electronic. E-insurance will also be similar.
There will be no paper form. There can be no case of loss of policy document when it was in transit or it was given to the security by the courier person and it was lost, etc.
What is the process for opening an e-insurance account?
There is a single-page form which needs to be filled and submitted physically with a colour photograph. Address proof, a PAN, or Adhaar card is a must. Along with the account opening form, you can give your current policy details and fill the policy conversion form − one form per insurer.
CA. Sanjeev Soni
CA. Sanjeev Soni

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