In your interest.
Online Personal Finance Magazine
No beating about the bush.
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.
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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.