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Journalism of Courage
In a path-breaking move,the Insurance Regulatory and Development Authority (Irda) has allowed insurance companies to sell their polices in electronic format,without physical paper,akin to equity shares issued and transferred through depositories in the stock market. Irda has also unveiled guidelines for issuing policies electronically through repositories which,experts say,will lead to reduction in transaction costs and ensure swift modifications in insurance policies.
Making available e-insurance policies would bring about efficiency,transparency and cost reduction, Irda said in a statement. The guidelines state that an insurer issuing e-insurance policies will have to take services of a registered repository. All such insurance policies in electronic form shall be treated as valid insurance contracts, it said.
Announcing the guidelines for repositories,which compile and store data about policyholders on behalf of insurance companies,Irda said,The objective of creating an insurance repository is to provide policyholders a facility to keep insurance policies in electronic form and to undertake changes and revisions in the insurance policy with speed and accuracy.
A certified insurance repository has to have a networth of at least Rs 25 crore,without any foreign investment,wherein no insurance company can hold over 10 per cent or hold any managerial position.
The insurance repository,before commencing the operations,shall put in place measures to safeguard the privacy of the data maintained and adequate systems to prevent manipulation of records and transactions, it said.
Further,the guidelines said that an insurer can enter into an agreement with one or more insurance repositories for maintaining the electronic insurance policies. While earlier an insurance policy was legally required as evidence of contract,the Information Technology Act of 2000 had paved the way for issue of documents in electronic format.
In order to hold e-insurance policies,a separate and distinct e-insurance account (eIA) should be opened with insurance repositories. An eIA can be opened by a person who has insurance policies on his own or who proposes to take insurance cover. An insurance repository can open an e-Insurance Account on the request of the policyholder and recommendations of an insurer who obtains the desired KYC documents. The copy of the ID proof and address proof should nevertheless be documented by the insurance repository,Irda said.
The insurance regulator has allowed the following companies to act as repositories a public limited company registered under the Companies Act,1956 with a minimum share capital of Rs 5 lakh; a public financial institution as defined in section 4A of the Companies Act,1956 (1 of 1956); a wholly-owned subsidiary of an existing depository registered with Sebi under the Depositories Act,1996 and a company fully promoted by either Life Insurance Council or General Insurance Council or by both together or jointly with any of the above.
The insurance repository or its approved person should not be engaged in insurance solicitation or in any of insurance related activities and services.
