Digitalisation drive could improve insurance penetration


If one were to measure the degree of penetration of insurance industry in the India, it would be found that there is scope for a lot more to be done. However, now there is scope for hope in this regard, with the Government of India promoting digitalisation in financial transactions with commitment and intensity.

A recent article published in Financial Express, authored by Mr. Kamalji Sahay, Director, CAMSRep, covers the many possibilities that digitalisation of economy would offer to the advantage of the insurance industry.

Excerpts from the article:

Prime Minister Narendra Modi has been vigorously pursuing the agenda of converting the country’s socio-economic landscape into a digital highway for faster and more inclusive growth. The mission is to map every Indian to a network to enable them to access all kinds of services, benefits and information without hassle and without discrimination. The current drive to move all financial transactions between any two entities or among several entities to the digital platform is a very determined effort to achieve this objective.

While Aadhaar provides a reliable identity to about 90% citizens, the stress on opening bank accounts such as a zero balance account under the Jan Dhan Yojana is targeted to make every entity KYC compliant and armed with a digital identity acquired through the bank account number or the registered mobile phone number.

In the marketing of life insurance, obtaining KYC data and processing the first premium payment have always been very challenging. During consideration of the insurance proposal, verification of several facts, right from age proof to income detail or records of previous policies, are required for evaluating the life before the risk is underwritten.

After completion of the proposal, the policy bond is printed with information on name, address, sum at risk, premium mode and amount and other conditions so that it establishes a legally valid contract between the insured and the insurer. Payment of subsequent premium with the contracted frequency and of any policy proceeds to the policyholder or the claimants has to be hassle free so that the insurer is able to honour its commitment in letter and spirit.

Lack of efficiency in this regard is the most important impediment in achieving higher insurance penetration. When an intermediary asks the potential customer for submitting KYC details, his first reaction is to either postpone buying of insurance or ask the salesman to come later. It’s worse when demands for documents even after depositing the money keep coming to the prospective policyholder. And in utter annoyance, he just refuses to talk to the sales person, depriving himself of a much-needed financial security cover. For people living in remote areas or those belonging to the disadvantaged sections of society, these issues have been a major deterrent in securing life insurance cover. The effect is visible in the low penetration of life insurance.

Aadhaar, which has been recognised by the Irdai as a valid KYC document, issue of guidelines regarding e-insurance account and insurance repositories by the regulator, opening of bank accounts by almost every eligible Indian have suddenly solved many of these latent issues. All these requirements can be complied with through networking with Aadhaar and banks. Even premium and claim payment can be smoothly transacted to minimise lapsation of policies and hassle-free credit of the insurance proceeds to the insured’s or claimant’s account .

Apart from such procedural advantages, digitalisation will enable insurers to identify prospective customers. Repositories can encourage people to go for more insurance. The environment would provide incentive to insurers to operate in villages. People in remote areas may also find it convenient to buy and maintain a few life insurance policies. The new landscape throws up opportunities for insurers to rethink their strategies and deepen their grip on the market. Those insurers who would take time to realise what has happened lately, may face the danger of being left behind in India’s quest for raising insurance penetration to the best global standard.

Article source:

About CAMSRep


CAMS Insurance Repository Services Ltd (CAMSRep), a subsidiary ofCAMS, is one of the major Insurance Repositories in India Licensed by Insurance Regulatory and Development Authority of India (IRDAI). CAMSRep, as an Insurance Repository opens unique eInsurance Accounts (eIA) for policy holders,which in essence are convenient, safe and relatively risk-free electronic policies. CAMSRep also acts as a single point of service for all ePolicies held by a policy holder. Apart from repository services, CAMSRep also provides outsourcing services to multiple Insurance Companies in accordance with IRDAI regulations. To know more about CAMSRep, please visit




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Sudarshan Ranganthan

Breaths Investments, Suggests Wealth Creation Ideas, Lives on Law Of Attraction

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