E-insurance: The fine print that can make IRDA initiative fail

Insurance Repository is a good initiative from IRDA. It will help the insurers and insured with inherent benefits of insurance policy demat. But, will you really be able to demat all your insurance policies? Will insurance companies tie-up with all the repository companies?

The insurance repository system was introduced with great fanfare by finance minister, P Chidambaram on 16 September 2013 to digitise physical insurance policies. E-insurance policies will help insurers to save costs on printing and dispatching policies. Insurance companies will save crores of rupees every year that is spent on storing of physical insurance documents and repeat KYC. While the IRDA (Insurance Regulatory and Development Authority) e-insurance initiative is commendable, there is one blunder.
 

As a Moneylife subscriber Dr Visvanathan Krishnaswamy pointed out: “An insured can have an account only with one IR. However, the insurance companies need not have a tie-up with all the IR, thereby negating the whole value of the single point e-policy account concept.”
 

Will you really be able to enjoy the comfort of storing all your policies electronically under a single e-insurance account just like you hold your stock certificates and mutual fund units online in dematerialised form? The answer depends on whether every insurance company will tie-up with each of the five Insurance Repository (IR) firms. IRDA has given freedom for insurers to tie with one or more IR licensed by them, which is a flaw.
 

The insured can open account with only one Insurance Repository (IR). If an insurance company has not tied up with that IR then how can demat of the insurance policy become possible? For instance, an insurance company may have IR tie-up with Karvy and the insured may have account with CAMS. How can an insurance policy be shown in demat if the insurance company does not have a tie up with CAMS as well? Moreover, the five companies have been given the status of insurance repositories are given licence that will be valid only till 31 July 2014.
 

One customer can have insurance policies from multiple insurers and the only way to get all the policies digitised for this insured is that those multiple insurers have tie-up with the IR where customer has opened e-insurance account. If not, then the IRDA initiative will miserably fail. The customer may have some policies in demat while others may not be. Would they benefit with partial demat? No.
 

Moneylife had written to 10 insurance companies and IRDA to get their response. Unfortunately, only five insurers have responded. According to one life insurer, “We are in process of negotiations with IR about the cost to digitise policies per person and annual servicing fees. We cannot tell if we will sign agreement with all the IRs or not.” It means insurance companies will prefer to tie-up with the IR that offer best rates and they may not tie-up with all the five IRs. If so, e-insurance will be a non-starter.
 

IndiaFirst Life Insurance is amongst the first to offer all life insurance policies in demat format. They also have tied-up with all the five IRs licensed by IRDA. According to Karni Arha, chief financial officer, IndiaFirst Life Insurance, “For depositing the policy, the insurance company needs to have tied up with that respective IR. As IndiaFirst has already tied up with all the five approved IRs, we can deposit our customer policy in his respective account without any issues.” 
 

According to TR Ramachandran, CEO and MD, Aviva India, “Given that e-stamping (Mudrank) facility is still not available in Haryana, we have yet not frozen our IR tie-ups. We are working with multiple IR players to devise and streamline a process that will add value to our customers. The IR concept is based on the premise of customer convenience. As the adoption of IR increases it will be become imperative for both the customer and the insurer to provide/ leverage several options. Currently, an insurer need not tie up with all IRs, and an insurer cannot issue a demat policy to someone who does not have an account or is unwilling to open an account with the IR options provided by that insurer.”

 

According to Rajesh Sud, CEO and MD, Max Life, “We believe a life insurer will need to partner with all five IRs, since the choice of IR is left to the customer. Max Life is currently in the process of evaluating the technical as well as commercial aspects of all five IRs, and at the same time we are in the process of readying our systems for this change. Keeping in mind that the insured can open account only with one IR, we are considering all five IRs.”
 

HDFC Life has tied-up with NIR (National Insurance policy Repository), CIRL (Central Insurance Repository Ltd) and SHCILIR (Stock Holding Corporation of India Ltd Insurance Repository). According to them, “The infrastructure for the dematerialisation of insurance policies has just started and we are in the initial stage with some tie ups in place. When the project takes off we expect every insurance company to tie up with all the IRs and cannot restrict the tie up to few IRs only.”

 

Dr Krishnaswamy, says, “After opening an account with CAMS Repository, I have now come to realise that not all companies are as yet with the IR. Further, none of the companies I hold policies in (LIC, Max Life, Aegon Religare, ING Vysya, Max Bupa) have a tie up with any of the IRs as on date. This aspect has not been publicized by the IRDA, Media or the repository websites.”

 

IRDA has already stated, “Both new and existing life, annuities, health and general insurance policies can all be credited to this account. However, during the initial phase, the life insurance policies would be credited to this account. The general insurance and group insurance policies would be credited subsequently.”
 

According to Mr Ramachandran, “The dematerialisation of insurance policies is certainly the future and will benefit customers as they will be able to manage their policies at their convenience. It will help insurance companies address issues around contactibility, delivery of documents, managing policies and KYC norms. It will also help in checking frauds and mis-selling cases, and increase transparency. Over time, this will also allow companies have improved access to a wider consumer base within India and reduce operational costs significantly.”

 

The five IR companies are: NSDL Database Management Ltd (NDML) National Insurance Repository, Central Insurance Repository Ltd, Stock Holding Corporation of India Ltd Insurance Repository, CAMS Repository Services Ltd and Karvy Insurance Repository Ltd.

E-Insurance launched; IndiaFirst offering demat for all policies

Like this story? Get our top stories by email.

User

COMMENTS

IndianMoney

5 years ago

This is a valid point and Insurance Companies will have to tie up with all five insurance repositories.The customer is free to choose his own insurance repository and if the insurance Company is left to do the same then e-insurance repository is a non starter.The idea of a customer being able to access all his insurance policies of all insurance Companies in a single statement is certainly good but its success depends on its implementation.

Param

5 years ago

i still don't understand why insurers MUST tie-up with all depositories.
why can't the depositories talk to each other & thus reduce cost for insurers & end users?

PRABHAT

5 years ago

BUT INSURANCE CO OFFICIALS ARE NOT AWARE OF IT ?

gcmbinty

5 years ago

It is too short a time for any scheme get on board - having been launched on Septembeer 16, 2013 only. The flaw mentioned in the story by Dr Visvanathan Krishnaswamy is not incorrigible being technology lapse. I am sure the software engineers will be able to solve the problem shortly and the insured will benefit.

REPLY

Dr VS Gogia

In Reply to gcmbinty 5 years ago

This is not something that is attributable to technical glitch. This is a flaw in IRDA guidelines and can be corrected by IRDA by modifying the guidelines, mandating all insurers to get registered with all the IRs.

raj

In Reply to Dr VS Gogia 5 years ago

True. IRDA has to correct it. Dealing with multiple IRs will increase cost for insurance company, but necessary for e-insuranec to work

SANJAY KUMAR

In Reply to raj 4 years ago

Dear Mr Raj Pradhan

Thanks for educating us vide your valed news article dtd 21.10.2013 on e-Insurance intiated by IRDA.

1. Whether all the insurers have decided to have agreeemnt with all the five insurance repository registered by IRDA by now?

2. What about e- Insuarnce for general insurance policy ? For that how to convince the general insurance companies. If it happens it would be good for policy holder and the companies both.

3.Whether FDI of 49% allowed by government would also help the customer in e- Insurance ?

Looking forward for your kind reply.

Thanks

Sanjay Kumar
Ahmedabad

Jagdish Motwani

5 years ago

The Insurance Contract (Policy) is not on par with Shares, Bonds or MF. Each insurer has differrent set of Policy T&C & fine prints & also format for issuing Policy Schedules are also differrent. Further, in each sub-class of policies in general insurance there are Add On Covers & Extensions as well as some covers have option to be deleted. Hence, this facility specially for non life insurance may not be benificial to customers though it may be of cost savings to insurers. There are no TATs' for policy issuance by insurers & this may also be a vital factor. A veru simple example for abuse by insurers will be to avoid Free Look Period by issuing policy in Demat form. I feel all this is being done to facilitate insurers' cost savings, etc. & at the same time only to keep big brokers of financial houses who will have edge over small agents by their association with Repository Participants where they can arrange A/Cs'.

KAVIRAJ B PATIL

5 years ago

I wonder why no one has observed a similar mess with regard to KYC for Mutual Funds. Though I have invested in a scheme of UTI some two decades ago, when I and my mother wanted to invest in some fund recently, I completed the KYC and submitted it through Bajaj Capital. This was in March 2013. Later, when my mother invested in another scheme, the fund refunded the amount saying that KYC was not done. Now, after 7 months after submitting KYC, my status as well as my mother's is shown as under process. When I approached Bajaj Capital, they say this is a common problem and the organisations ie CVL, NDSL etc., do not even respond to emails. Investors are ready to invest but then the government is only interested in making everything complicated.

REPLY

Dr VS Gogia

In Reply to KAVIRAJ B PATIL 5 years ago

Moreover, on KYC Update with KRA the email and phone numbers are not updated. Even with change in city on address update, the phone/mobile numbers continue to be the old ones. For this one has to separately write to AMCs in each scheme where one i s invested.

Param

5 years ago

why cant they do it the same way as RTAs & Share Depositories - they need to talk to each other & not bother the customer or insurer about the technical details.

pravsemilo

5 years ago

A similar issue is plaguing the mutual fund industry. Ironically it is the same intermediaries involved.

Each AMC has a RTA. Presently there are CAMS and Karvy. Some AMC do this inhouse like Franklin Templeton (FTAMIL). Investors have the option to get a consolidated statement emailed to their registered email address from the website of CAMS and Karvy. This also includes the holdings in FTAMIL. You don't have to register with them for this.

Off late some AMCs have started theirs own RTA (Sundaram and BNP Paribas). The consolidated account statement doesn't include holding from these AMCs. Worse was that in the initial days you had to register and use a password to get the account statement. This adds to one more user id-password combination to be remembered.

I had enquired at CAMS if they could also include holding from Sundaram to which they said no. I also raised a complaint at SEBI's SCORE against the password requirement at Sundaram. The complaint was forwarded to Sundaram and they informed me that they don't have the password requirement anymore. Not sure if this was done by themselves or on behalf of my complaint. But this move has put me off from investing in any of the Sundaram schemes. It is very inconvenient to go to their office instead of going to a RTA where I can invest in many AMCs. Getting a statement of account also adds to the trouble.

sivasankaran

5 years ago

THE INSURANCE COMPANIES SHOULD BE MANDATED TO HAVE TIE UPS WITH ALL THE DEPOSITERIES

REPLY

Param

In Reply to sivasankaran 5 years ago

i don't think this is right, just like the other option would be to make customer have tie-ups with all depositories...
insurers can also choose the best service provider - the only need should be to ensure the depositories talk to each other (in a mandated common protocol) to ensure seamless service to customer/insurer?

raj

In Reply to Param 5 years ago

Making customer tie-up with all depositories is not correct as it will not give all the policies at one place. Either insurers have to tie-up with all repositories or depositories talk to each other. Moreover, don't know why 5 repositories were really needed? It's only creating business for them.

raj

In Reply to sivasankaran 5 years ago

I agree

sivasankaran

5 years ago

THE INSURANCE COMPANIES SHOULD BE MANDATED TO HAVE TIE UPS WITH ALL THE DEPOSITERIES

Multinational TNT: Charges for Insurance & Refuses Claims

In a bizarre case pursued by a small businessman,  Nilesh Prabhu, TNT lost in arbitration, was investigated by IRDA and penalised by road transport authorities. Why is IRDA not acting on obvious facts?

Bluray Nutritional Products has been using the courier service of TNT India and diligently paying the charge of 0.2% of declared value or Rs125 (higher of two) which is shown as...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital Access

Subscribe

Moneylife Magazine Subscriber or MAS member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Insurance Fraud: A 28-hour chase to nab a person with seven names!

A bizarre tale of Bajaj Allianz’s efforts to catch a fraudster depicts the difficulties during the chase. The story ends with a twist of finding that the offender was actually trying to defraud 11 other insurers. He had seven PAN cards and seven names

A long chase to nab an offender would be a normal course of work for a policeman, but it sounds strange for an employee of Bajaj Allianz General Insurance. This is precisely what happened with Sandeep Sarpande, assistant manager—corporate legal, who joined two policemen, from the Vimantal Police Station in Pune, and embarked on an arduous journey to nab the offender. They started at around 5am on a sunny morning for Mumbai, where the offender was residing. While the constables were tuned to the FM radio blaring in the vehicle, Sandeep was reminiscing as to how the crook could do everything so perfectly!

 

The crook had a Bajaj Allianz health policy and lodged a claim for reimbursement of his hospital expenses, where he was admitted for fever. When the Health Administration Team (HAT) claim team received the documents, they were a bit surprised at the claim amount of Rs55,000 for a simple fever! They scrutinised the claim documents and found that everything was perfect!

 

The inconsistency of the huge amount and a perfect documentation set the alarm bells ringing. The scrutiniser referred the case to their in-house fraud control team at HAT. The team investigated and checked with the hospital to ascertain the treatment costs and the medical protocol. To their astonishment, they found that the claimant was not admitted in that hospital though the documents provided were from the hospital.

 

After a thorough investigation, the hospital gave it in writing that the claimant was never admitted nor was given any consultation. When they probed a bit more, they came to the conclusion that the claim documents were forged. They confronted the offender on phone and he said that the documents were genuine. It was then decided by the legal team that an FIR be lodged at a police station against the claimant. Once the FIR was lodged at Vimantal police station in Pune, the next step was to arrest the offender and take it to the logical conclusion.

 

The vehicle suddenly came to a halt and jolted Sandeep. He realised that they had reached Bhayander, a distant suburb of Mumbai. As per the policy records the offender was residing in Bhayander. When they reached the flat they found it locked. They checked with their neighbour and were shocked to hear that nobody stayed in the flat by the claimant's name.

 

The police team then asked as to who owned the flat and the neighbour promptly provided the owner's contact details and the address where he stayed. Luckily, it was not far away but a 10km drive from where they were. When they reached the owners place they were in for another shock as he said that he has not rented his flat to someone by the claimant's name.

 

Sandeep and the police constables then gave a description of the claimant. Based on the description, he gave the leave and license agreement which led to the claimant's actual name and photograph. The agreement also revealed that he was employed in a franchisee outlet of a leading telecom operator. Their next location was the franchisee outlet in Malad, a sprawling suburb of Mumbai. But this too yielded no result. With no clues about the offender’s whereabouts, Sandeep was back to square one.
 

The police constables seemed to lose interest and it was already late in the evening. But, Sandeep was determined to nab this guy and motivated the constables by saying that by coming so far they should not return empty-handed. They once again returned to the franchisee outlet and again enquired about the offender. After a lot of persuasion, one of

 

Update from Bajaj Allianz

1. The concerned offender was in Police custody for 12 days and judicial custody for 20-25 days. He was produced at the Magistrate Court at Pune. Currently, he is out on bail and the hearing is going on.

2. We have filed a case only for forgery and defrauding Bajaj Allianz. In the charge sheet, the case of multiple identities and PAN cards, along with other forgery offences are included.

his colleagues who happened to visit the outlet informed that the offender very much stayed in Bhayander but not at the address as per the policy records, but at a place which is a good 30-40km from there. They immediately took off for this new location, with great hope.

 

When they reached there, the wife of the offender panicked at the sight of police authorities and informed that he hasn't reached home yet. The police authorities knew that she was terrified comforted her by saying that they were just enquiring. After waiting for an hour or so, the offender finally reached his home much to the relief of the anxious police constables. They held him and started enquiring about his forgery attempts and when they started the interrogation in their true police style. He quickly spilled the beans and revealed that he had similar forged claims to over 11 other insurers and was in various stages of claim processing.

       

They were amazed to find that he had reams of letterheads, rubber stamps and other stationery items of various hospitals at his place. But the most amazing thing was that he had seven PAN cards, 11 credit cards and above all seven names!

 

They arrested him immediately and when Sandeep glanced at his watch it was 11.45pm. Armed with their prized catch, they started their return journey and reached Pune at the crack of dawn at 3.30am. The offender was first taken to Sasson Hospital for a detailed health check-up as it is mandatory and finally put him in the police custody.

 

After finishing all the required paperwork and related process, Sandeep reached home at 9 am and crashed into bed. After 28-hours and a 700km chase they were finally able to nab the offender.

 

The police authorities produced the offender in the Pune court the same day. He is currently out on bail. The case is still being pursued by Sandeep who keeps a tab on the proceedings on a regular basis. He wants the offender to be punished which will serve as a lesson for other offenders.

Like this story? Get our top stories by email.

User

COMMENTS

Kishor Chhabria

4 years ago

Sandeep can punish a policy holder with a genuine claim too... isn't it Sandeep

Bajaj Allianz... avoid buying a policy

Param

5 years ago

i wonder if this was possible without any 'support' from the company staff? who is going to investigate that part - coz there is no award for 'Find the crooked employee'...

REPLY

nagesh kini

In Reply to Param 5 years ago

Certainly there's got to be a 'deep inside connection' without which it is not possible.
In response to Mediclaim RTI query in one PSU the DOs concerned have the audacity to tell the PIO that the 'files/policies do not exist' even when there is ample evidence of the fraudulent settlement of the claim!

nagesh kini

5 years ago

The young man has to be a genius to own so many PAN and Credit cards with multiple addresses and con so many insurance companies with so many claims that got settled!

DEEPAK KHEMANI

5 years ago


Wow detailed reporting from MONYLIFE, What is required is exemplary punishment in cases like these which would set an example for others but sadly in our country the law is an *** and its a long drawn process and as you have reported he is already out on bail.
It is cases like these which make Insurance companies' reject genuine claims resulting in people mis-trusting the Insurance company which then may delay or deny legitimate claims.

Atiker

5 years ago

What about white frauds perpetrated by the insurance companies under the garb of fine print :)

REPLY

raj

In Reply to Atiker 5 years ago

There are two sides of a coin. Moneylife has highlighted the fine prints many times more than any other media. Fraud from consumers is also a reality that cannot be ignored.

raj

In Reply to Atiker 5 years ago

There are two sides of a coin. Moneylife has highlighted the fine prints many times more than any other media. Fraud from consumers is also a reality that cannot be ignored.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

online financial advisory
Pathbreakers
Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
online financia advisory
The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
financial magazines online
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
financial magazines in india
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)