Insurance repository eyes LIC for big leap

The company provides its clients with an electronic insurance account that can enable easier disbursal of claims, under a single umbrella account, saving the insurers and nominees the trouble of knocking on multiple doors. 

The firm claims to own a one-of-itskind model in the world after the Insurance Regulatory Development Authority (IRDA) permitted outsourcing of non-core activities of the insurance business. SV Ramanan, CEO, CamsRep says, “After successfully stitching partnerships with private insurance players, we are in talks with LIC. This will help scale up our business considering LIC’s penetration and national footprint.” At the moment, LIC is toying with the idea of outsourcing its online portfolio to CamsRep, that got hived into becoming a subsidiary of CAMS in 2008. 

CamsRep obtained the IR license in 2013, when a directive from the IRDA was to offer e-insurance accounts that would make available all the policies online using a one-time KYC or know your customer procedure. Ramanan believes it’s high time that this type of outsourcing could be leveraged more effectively. “The e-insurance account or electronification has been made mandatory by the IRDA in October last year. Though the customer does not have to pay anything, the awareness has been poor impacting the adoption of such a facility,” he says. 

He gives the example of the DMat or dematerialisation exercise, when the process of share trading going paperless took four years. “There was a phase when paper plus DMat accounts existed but only when a call to go fully electronic was taken, could the redundancy be eliminated,” he pointed out.  Estimating the IR to be a Rs 300 crore market, he said the insurance regulator had granted licenses to three other players (NSDL, Karvy, CSDL) besides his company. He adds that the IRDA had introduced the concept of authorised representative (akin to executor of will) in 2013 thereby providing access to the e-insurance account especially needed in case of disease or incapacitation. He cited the instance of a 60-year-old man, who wanted to urgently opt for the IR service, to make his insurance records available online as his children were abroad. So, the demand is also coming from policy holders, used to legacy systems, Ramanan said. He adds, “The PAN card or an Aadhaar card is what makes the one-time KYC an easy one. Demonetisation expedited the adoption.” 

In fact, LIC, which was a bit slow in going digital, saw its policy sales surge in the first three weeks after it went online. Every year, 4 crore policies are getting added in the life insurance segment whereas in the non-life segment, 10 crore policies are being issued. CamsRep is also planning to tap the two segments – general and motor insurance. Even now, 50 per cent of the motor vehicles are not insured but CamsRep claims to have a 97 per cent persistence rate compared to the industry average of 66 per cent. Ramanan points out that an insurance company typically spends Rs 800 to Rs 1,200 per policy to administer and maintain it and Rs 100 for printing a LIC document. 

The firm is able to sustain by leveraging its marketing and distributing expertise, where the back-office operations are chargeable on a per seat basis (Rs 30,000) or as a percentage of collections (1 to 2 per cent) as commissions, Ramanan says, adding that the adoption is faster in tier II and tier III cities such as Salem, Chandigarh and Patna.