Chennai - Insurance repositories are seeing increased business volume in the past six months but there is a long way to go, said a top official of CAMS Insurance Repository Services.
"The business volumes have increased in the last six months owing to IRDAI's (Insurance Regulatory and Development Authority of India) decision asking the life insurers to digitise all policies received in digital format," its CEO S.V. Ramanan told IANS.
Noting that about 2.5 crore life insurance policies (1.5 crore by Life Insurance Corporation of India and one crore by private life insurers) and about 12 crore health and motor policies are sold by non-life insurers in India annually, he said that there is a long way to go for the repositories as only 12 lakh life insurance policies are in digital format till date.
But the good news is that the business is slowly growing, he added.
"While average cost for a life insurer for maintaining a policy in a repository is about Rs 40 per year, it is Rs 10 per year for a non-life insurer in respect of health and motor insurance policies," Ramanan said.
Totally there are four insurance repositories in the country viz NSDL, CDSL, CAMS and Karvy.
Simply put, insurance repositories keep the policies in digital or demat form like company shares.
As per the regulatory norms, the digital record keeper should be a third party.
Ramanan said a life insurer spends around Rs 150 per policy on its maintenance in traditional/paper format and opting for digital format is a major cost saver for them.
Queried about the insurance repositories charging about Rs 40 per life insurance policy per year, he said if the volumes pick up, then the overall cost may come down.
However, adoption by life and non-life insurers of having their policies in digital platform is not great as they feel it has dual costs -- maintaining policies in paper as well as digital formats.
Ramanan said pure record keeping may not get the insurance repositories money and hence, CAMS provides other services like tele-marketing, agency administration, issue of policies and their administration and claims processing for an additional fee.