E-Insurance launched; IndiaFirst offering demat for all policies

IRDA's Insurance Repository System is going online. Insurers will save money with the green initiative due to less paperwork, mailing and one-time KYC. But will they pass on the savings to customers?

In a move to lower the costs for insurance companies and bring transparency to policyholders, finance minister P Chidambaram on Monday launched the Insurance Regulatory and Development Authority (IRDA)'s  Insurance Repository System (IRS). The System will help insurers to save costs on printing and dispatching policies.

IndiaFirst Life Insurance is amongst the first to offer all life insurance policies in demat format. Its press release states, "The electronic insurance account will do away with the need for KYC norms like address and identity proof for every purchase and will bring in all the benefits of demat to the insurance business, including automatic reminders for premium."  

According to IRDA's senior official, Life Insurance Corp of India (LIC) spends Rs600 on storing each policy. With e-insurance, insurance companies will save crores of rupees every year on storing of physical insurance documents, mailing and repeat KYC. According to IndiaFirst press release, "Insurance companies will have a huge cost incentive in encouraging customers to hold their policies in electronic form."  But, will the savings be passed to policyholders with increased bonus or lower premium? Unlikely, because insurance companies will be paying the 'insurance repositories' for maintaining the data in an electronic format. The savings on dematerialisation of stocks has not been passed on to customers (i.e. shareholders), so why would it be any different this time?

According to Dr P. Nandagopal, CMD, IndiaFirst Life Insurance, "Going forward, we will also implement the demat format for low cost plans especially micro insurance.  In these cases the costs saved will automatically be transferred to the customer.  This will be taken into consideration while designing the plan itself."

IRDA recently said that five companies have been given the status of insurance repositories and are provided with a licence that will be valid till 31 July 2014. Insurers can enter into agreements with one or more repositories. The five companies are: NSDL Database Management Limited, Central Insurance Repository Limited, SHCIL Projects Limited, CAMS Repository Services Limited and Karvy Insurance Repository Limited.

The repository will give a unique number to every individual and all his life insurance policies will come under that account. The IRS will also have digitised non-life insurance policies soon. The data maintained by the repository will include history of the claims of the individual. It will also have the names of the beneficiaries, assignees and nominees. There is no trading of insurance policies in demat form and, hence, this facility may be of limited use for the customer.

Procedure for opening an e-Insurance account:

    Download the e-Insurance Account opening form from the IndiaFirst website
    Fill the form and provide the KYC documents (attested)
    Send the filled e-Insurance Account application form to IndiaFirst
    e-Insurance Account form will be sent to the respective IR (Insurance Repository) by IndiaFirst
    IR (Insurance Repository) will generate the e-Insurance Account number on the basis of information in the account opening form and inform the e-Insurance Account number to IndiaFirst Life
    IndiaFirst will credit the policy information in electronic form against the customer e-Insurance account on IR portal
    IR will intimate customer on successful upload of his policy in e-Insurance account




3 years ago

AlankitGroup:-Very Useful information on E-insurance.


3 years ago

There appears to be a clear cut case for payment on interest on monthly basis as interest is charged on loans and advances on monthly basis. By applying the same yardstick it is anybody's guess why interest is not paid monthly

manish wani

4 years ago

Why one more unique number? The AADHAR number should have been used for the unique identification and all policies could have been linked and stored in the repository under that number.
This would have been one more incentive to have a AADHAR number. Henceforth, for any such activity one option should be to link to AADHAR number till the time that everybody gets it and after that it should be the only number which should be used everywhere.

Food Inflation hits 18.8%

During August, food items became costlier by 18.8% on year-on-year basis, mainly on 245% increase in onion prices and 77.8% hike in vegetable prices

Costlier onion and other vegetables pushed inflation up 6.1% in August for the third month in a row, making it difficult for the Reserve Bank of India (RBI) to cut rates in the monetary policy review due later this week. The inflation stood at 5.79% in July and 8.01% in August 2012.


In a research note, Nomura Financial Advisory and Securities (India) Pvt Ltd, said, "Today’s data show that, even as demand remains weak, supply-side shocks from a weak rupee and higher food prices are pushing wholesale price index (WPI) inflation up. Even as we expect vegetable prices to reverse in coming months, we expect this trend of cost-push inflation to continue to drive WPI inflation higher in the near-term from currency weakness, elevated oil prices and impending fuel price hikes. We do not see demand-driven inflation as a problem in the current environment; instead, supply shocks will likely be the key driver."


During August, food items became costlier by 18.8% on year-on-year basis. The highest increase during the month was witnessed in the case of onion, which reported an increase of 245% year-on-year. Vegetable prices in general rose 77.81%. The high increase in prices was also seen in other essential food items like rice, cereals, egg, meat and fish.


India Ratings & Research, in a note said, although it expects cyclical inflation to subside from September 2013 due to good monsoon, structural factors driving food inflation will continue to exert pressure on inflation. “Moreover, the danger of suppressed inflation due to non-pass through of currency depreciation still persists. Therefore, inflation will increase as companies begin to pass through rising import costs on account of a weak rupee into the domestic market,” the Fitch group company said.


On the positive side, potato prices declined about 15% followed by pulses, which became cheaper by 14% compared to August last year.


In the case of manufactured items, sugar and edible oils became cheaper by 4.2% and 3.86%, respectively. Overall, manufactured items showed a moderate increase of 1.9%.


Raghuram Rajan, the new governor of RBI, who is scheduled to come out with his first credit policy review on 20th September, will have to take into account the rising inflation while announcing steps to boost the sagging growth.


"The key challenge for the RBI is the continued elevated level of food inflation, which is also reflected in high CPI inflation and elevated inflation expectations; these factors reduce the available space to stimulate domestic demand. In its policy meeting on 20th September, we expect the central bank to keep key policy rates (the repo rate and cash reserve ratio -CRR) unchanged, in line with consensus," Nomura said.


Ratings agency CRISIL said, it had highlighted last month that there was an upside risk to inflation from the weak rupee, which is now materialised.  “Accordingly, we have revised upward the average WPI inflation forecast for this fiscal to 6.2% from 5.3%. Core inflation is low right now, but loosening of monetary policy to support growth runs the risk of creating a situation of high-generalised inflation as the supply shocks persist. We expect the RBI to leave interest rates unchanged on September 20 and also for the rest of the year,’ the unit of S&P said.


According to Nomura, the focus on 20th September would be whether the RBI starts to unwind some of its recent liquidity tightening measures, which were aimed at stabilising the currency. "Should rupee remain stable after the 17-18th September Federal Reserve meeting, a calibrated reversal of some of the liquidity tightening measures cannot be ruled out, in our view," it added.



Vinayak Bhimarao Mudholkar

4 years ago

If Rbi cuts rate will people buy more onions or other food items?....Core inflation is low right now....When people have been losing jobs; do the unemployed or partly employed buy more goods just because interest rates are reduced !!!....Moneytary policy has a very limited roll in the situation we are facing!!!

FSLRC members handsomely “compensated” for their “contribution”

In a response to a Moneylife RTI, the Ministry of Finance has revealed that Rs4.72 crore of taxpayer’s money was spent on the members of the Financial Sector Legislative Reforms Commission-FSLRC. It is time to standardise compensation norms of those who provide policymaking inputs

A reply to Moneylife Right to Information (RTI) application revealed that the Financial Sector Legislative Reforms Commission (FSLRC) has spent at least Rs4.72 crore of taxpayer’s money since its inception in March 2011. It was also found out that some members were being paid huge amounts of taxpayer money for their “contributions”. For example, we found out that Justice (retd) BN Srikrishna, who used to be the judge for the Supreme Court and headed the FSLRC, was paid Rs40.53 lakh over three years for heading the Commission! 

Moneylife filed an RTI to find out how much of taxpayers’ money went into the Commission since inception. Here is what how much FSLRC members were being paid since the Commission’s inception in March 2011.

FSLRC Members

Paid  (Rs in lakh)

Justice (Retd) BN Srikrishna


Justice (Retd) Debi Prasad Pal


Dr PJ Nayak, ex-country head, Morgan Stanley


KJ Udeshi, ex-Deputy Governor, RBI


Yezdi H Malegam, practising accountant


Jayanth R Varma, academic


M Govinda Rao, academic


Late C Achuthan, ex-jusrist


Dhirendra Swarup, formerly ministry of finance


CKG Nair, Secretary, FSLRC


Bobby Parikh, Managing Partner, BMR & Associates


Raj Shekhar Rao, Advocate


Somasekhar Sundaresan, Advocate



The remuneration, fees and compensation is just one part of the expense paid to these members. We also found out that the FSLRC spent huge amounts of money on ferrying members to and forth, feeding and providing them with food/accommodation, reimbursement of office expenses and conveyance and “other assorted expenses” (whatever this means). The table below shows how much were spent on each of these expense heads, for each member of the FSLRC and its various working group committees, since March 2011:

Expenses Head

Total (Rs in lakh)



Food and Accommodation


Office expenses and conveyance


Other assorted expenses



Some of the members of the FSLRC are very well positioned in the commercial world and earning fat compensation or fees. For example, Dr PJ Nayak was the country head of Morgan Stanley at the time of his being appointed to FSLRC. This is a coveted position in a global firm, which would have fetched crores in compensation for Dr Nayak, a former bureaucrat. Yet, he had no problem in picking up a sizeable amount (Rs20 lakh) for his “services” to FSLRC. Another member, Jayant Varma, a well-known professor of Indian Institute of Management Ahmedabad-IIM-A (also, partly a taxpayer-funded institute), also got Rs20 lakh. Three others are part of flourishing professional-services firms.

While these handpicked “thought leaders” probably deserved to be compensated for their contribution to policy making, even though the report may only gather dust, our RTI application also revealed that there was no compensation policy in place. Other well-known personalities like Aditya Puri, Ravi Narain, Janmejeya Sinha and Naina Lal Kidwai were paid nothing for their work as members of working groups. In fact, members of the Working Groups of FSLRC were not paid at all.

Indeed, there is no standardisation on how these committees are formed and how much members should be paid, if at all, for a service, which is not commercial and in the nature of public service. For instance, while this was a Commission, which had a very wide canvas in trying to suggest sweeping legislative changes, there have been many important committees set up by various regulators where members were paid nothing for their public service. Members of SEBI’s Advisory Committees (primary market, secondary market and mutual funds) are not paid anything either. Until now, members to these committees saw some honour and prestige in serving as members. Many from the industry also saw this as a tool to network and further their business interests. Now, they can expect direct fat compensation as well, apart from indirectly exploiting their public-service role.



Deepak Gupta

4 years ago

The time duration for which the compensation was paid, is mentioned only for Justice Srikrishna. It is mentioned as 3 years. So, 40Lacs comes to just about 13Lac per year.

For a person of his eminence and experience, that is hardly a pay that anyone will complain about.

The real problem here is the absence of clear guidelines for such appointments. This may create room for misuse in the future, and should be taken care of.

That four members of the commission have written dissent notes - how is that relevant to the compensation paid to them? I'm sure you are not suggesting that people should not not dissent (so, leave their honest opinions behind and become yes men) only because they are being paid for their time?

Vinay Shah

4 years ago

The entire report is the brain-child of Ajay Shah. It is he alone who had laboriously drafted the report. What was the compensation received by him?


4 years ago

In the history of independent India FSLRC was probably the 2nd largest undertaking in writing new laws. This was an immense project with had a dedicated research team working full time for 2 years. How can you question their compensation?

What you should be questioning is why the report is 'gathering dust' after so much money being spent. Not why this money was spent to begin with.


Sucheta Dalal

In Reply to Parikshit 4 years ago

Yes we can question their compensation. Many who have drawn lakhs of rupees hold full time jobs, where their annual earnings are in crores.
On the other hand many of us have served on innumerable committees where even our conveyance is not paid.
We need to know the basis on which these decisions are made. The basis on which consultants and lawyers are selected and who they decided to engage with and who they leave out.
The biggest surprise is this -- the four key members of the FSLRC have written dissent notes. What on earth kind of report is this? Who dictated the final report? Who dominated it so much that industry leaders were reduced to writing separate dissents?
There is a lot about the FSLRC that is not transparent and we would like to know what really happened during the deliberations.

G A Joseph

4 years ago

This report raises one ominous question. Is there not even one big man in our country who is willing to do something for the nation after retiring from high positions. If their rise to top positions has only add to their greed for money and they continue to seek more money after retirement selling their opinions, it is high time that post retirement engagements be made on honorary basis so that persons with social commitment and love for the country and its institutions come forward to provide guidance. Else let serving officials form committees and prepare policy documents. One is at a loss to understand what precious thing retirement adds to the wisdom and knowledge of these people that the society pays so heavy a price for this immeasurable commodity.

nagesh kini

4 years ago

Great report Aditya!
Pray what is the fate of the ground level implementation of this report? The MOF ought to come clean more particularly on the dissents.
While reimbursement of the actual out-of-pocket expenses is OK as also the travel and stay what is the criterion for the fat remuneration?
Most of the inputs will have come from the equally distinguised members of the working groups but they get nothing?


MG Warrier

In Reply to nagesh kini 4 years ago

Nagesh Kini

Your concern about dissent is shared by many. In my article on FSLRC published by, I observed:
It would appear that the Commission did not get opportunity to understand the present relationship between the RBI and GOI. The regulatory apparatus plus legislations in financial sector in India are in working condition. The FSLRC’s effort to re-invent them has already pushed the present regulators and supervisors to a confused state.

P J Nayak, inter alia observed in his dissenting note asunder:
“The Commission now arrests and partly reverses this directional movement, and it is with apprehension that one must view the very substantial statutory powers recommended to be moved from the regulators (primarily RBI) to the finance ministry and to a statutory FSDC, the latter being chaired by the finance minister. The Commission has recommended that direct statutory powers be vested in the government in matters of (i) Capital Controls and (ii) Development. The statutory empowerment of the FSDC encompasses (iii) Inter-Regulatory Co-Ordination; (iv) Identification and Monitoring of SIFIs; and (v) Crisis Management. This transfer of powers collectively constitutes a profound shift in the exercise of regulatory powers away from (primarily) RBI to the finance ministry. The finance ministry thereby becomes a new dominant regulator.

“To rearrange the regulatory architecture in this manner, requiring new institution-building while emasculating the existing tradition of regulators working independently of the government, appears unwise. There is no convincing evidence which confirms that regulatory agencies have under performed on account of their very distance from the government; indeed, many would argue that this distance is desirable and has helped to bring skills (and a fluctuating level of independence) into financial regulation.”

No point in doing an MRI of FSLRC report or the dissenting notes. Application of “collective wisdom” is conspicuous by the absence in the whole affair. Some vested interests are itching for a truncated central bank with diminished role with no say in the non-bank financial sector, the government securities market and the foreign exchange market. This implies that the RBI would have no say in the management of the exchange rate and thereby in the forex reserves. Add to this the Commission’s view on government debt management. The Commission opts for a separate Debt Management Office (DMO), totally separated from the RBI, which is the dispensation North Block has been trying to push and RBI has been resisting for valid reasons for a long time now.


4 years ago

has there been a change in govt rules in, certain cases, that
it is allowed to function like companies-where 'sanction by appropriate person' is more important than the 'propriety aspect' ?

MG Warrier

4 years ago

Transparent norms for compensation packages, where public funds are involved (Here no need to get confused about the meaning of public funds- Organisations dependent on funds from public, whether as tax or as share capital contribution are all handling public funds and have only ‘Trusteeship’ rights on the resporces) need to be evolved. Thank you Moneylife for exposing the absence of any norm in this area.

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