Life insurance policy holders, who opt for electronic format of policy, may now get a 10-15 per cent reduction in their premiums as IRDA has revised guidelines with regard to repositories and dematerialisation.
“The insurer subject to F&U guidelines may offer discount in premium in respect of those policies maintained only in the electronic form,” regulator IRDA said in the revised guidelines of Insurance Repositories and Electronic Issuance of Policy.
Dematerialisation of insurance policy is being done by five insurance repositories, including CAMS Repository Services.
The objective of creating an insurance repository is to provide customers the facility to keep policies in electronic format.
Keeping the insurance policies in electronic form provide safety from misplacing, convenience similar to what is there in case of equities.
Besides, the Insurance Regulatory and Development Authority (IRDA) revised norms for outsourcing of both core and non-core activities mentioned in outsourcing guidelines to Insurance Repositories.
This may help insurers outsource the core activity such as the policy servicing function to specialist, who can not only provide front office presence, but also execute service request thereby reducing cost of operations and improve in turn around time, CAMS Repository CEO S V Ramanan said.
“Over short to medium term we see tremendous value add for insurers who in turn can pass on benefits to policy holders. Not only in terms of reduced premiums but also through faster resolution of their queries,” he said.
Experts said discounts in premiums could be in the range of 10-15 per cent.
Yesterday, the Reserve Bank allowed banks to act as brokers for insurers, set up their own subsidiaries and also undertake referral services for multiple companies with the objective to raise insurance penetration in the country.
Banks can also act as corporate agents without seeking prior approval from the RBI. However, they will have to comply with IRDA guidelines.
Under existing bancassurance guidelines, a bank can act as a corporate agent and sell policy of only one life insurer and one non-life insurance company.
The new guidelines allow banks to act as brokers permitting them to sell insurance policies of different insurance companies.