Corner Room Conversations: Sector needs to iron out dematerialisation cost structures with insurance repositories, says Tata AIA Life Insurance CIO Harshad Patil

Corner Room Conversations: Insurance Regulator IRDAI's (Insurance Regulatory and Development Authority) nudge to the insurance companies to create a demat account for insurance policies augurs well for the customers and companies, alike. In an Exclusive Interview with Shivendra Kumar, Harshad Patil, Chief Investment Officer at Tata AIA Life Insurance tells company's progress towards its implementation and challenges which stare the industry with a 12-month deadline looming. Excerpts! 

Tata AIA Insurance offers plans including term, ULIPs, saving schemes and others and has sold around 6.9 million insurance policies according to its own claims on the official website.   

1) What are your views on IRDAI’s push to the dematerialisation of insurance policies, and how is it expected to help the industry?

We support the regulations introduced by IRDAI and it will help to make the process completely digital, enable easier onboarding of consumers and also hassle free claims process. This will also aid the policyholders and insurers in multiple ways around providing efficient ways of servicing their consumers. Life insurance companies have begun offering eIAs to policyholders, but their penetration is nothing compared to the proliferation of dematerialisation shares. Its penetration is nowhere near as great as the dematerialisation of shares, whose volumes of financial documents are also high.

2) What are the challenges for the industry towards implementation in terms of costs and logistics?

The biggest challenge in implementation is opening e-Insurance Account (e-IA) for all the back book policyholders (retail and group business) for which the regulator has provided 12 months to all insurers. On the cost aspect, we believe that the current cost structure be it the one time account opening charges or the annual maintenance charges would need to be worked upon with the Insurance Repositories (IR’s)  considering this is going to be mandatory and the volume of accounts that will be opened will increase multifold.

3) If a policyholder has multiple policies from different insurance companies, who creates the demat account?

While this issue should be resolved with the help of the IRs, if a consumer has already opened an e-Insurance with a life insurer to dematerialise his life insurance policy bought from the same insurer, the consumer can add his other insurance policies bought from other insurers to the same account, provided he used the same PAN number to buy the policy.

4) What will be the advantages for customers?

A dematerialisation of insurance policies through an e-Insurance Account is like a repository where one can manage all life insurance, health insurance and other insurance policies in one place. Policyholders can access their insurance portfolio with a few clicks and have all their insurance policies in one place.

The use of an e-insurance account allows consumers to avoid unnecessary paperwork and protects them against policy loss or theft. Each e-insurance account has a unique account number that can be used in all correspondence.

5) How are you gearing up as a player to implement it and how big or small the target is for the company?

As part of its commitment to its consumers and offering them the benefits of Digital, Tata AIA Life was one of the first life insurers to offer e Insurance Accounts to its consumers. Today we have 46% policyholders who are using eIAs, and we are committed to extending the benefit to all the policyholders in line with IRDAI’s directive.

6) This move to dematerialise insurance was a nudge that came from the regulator or was it the demand from the industry?

Anyone who has purchased an insurance policy knows how important the policy document is. Previously, people had to take care of a physical document for years in case it was needed later, for example, at the time of a claim or maturity. Like many other industries, insurance has gone digital in recent years, and the eIA initiative gives us the opportunity to offer a complete digital experience to our customers. 

Tata AIA Life Insurance offers its customers six digital ways to access their policy documents, allowing them to access and store their e-policy anytime, anywhere. As part of our DigiRakshak campaign, we educate customers and advisors about the benefits of accessing their policies digitally and storing them in EIA accounts.