(From left) Sudhin Roy Chowdhury with Kallol Datta, president of the Bengal Chamber of Commerce and Industry, and LIC managing director Sushobhan Sarker in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, May 10: The Insurance Regulatory and Development Authority plans to set up a depository that will allow customers to hold policies in a paperless format much like investors holding equity shares in demat accounts.

“We are thinking of having an insurance depository like the one in the stock (market). It is still in a formative stage,” IRDA member (life) Sudhin Roy Chowdhury told reporters on the sidelines of the Insurance Summit here today.

He said instead of holding policy bonds in a paper form, the customers would hold them in a demat paperless format.

The IRDA official said a separate autonomous body would be formed which would operate the depository, adding that the regulator would lay down the regulations.

However, Roy Chowdhury said demat was not manadatory, and policy-holders could keep their documents in just paper form.

LIC growth

The Life Insurance Corporation of India (LIC) is eyeing a 15 per cent growth in new business premium in 2013-14.

“In LIC, we should be able to show a growth of 15 per cent this year on collection of first year premium,” Sushobhan Sarker, managing director of the company, said at the meeting organised by the Bengal Chamber of Commerce and Industry.

The largest life insurer in the country with a market share of over 70 per cent had suffered a 6.4 per cent decline in first year premium collected in 2012-13 to Rs 76,245.63 crore.

The LIC is betting on a higher market reach in the rural and tier II and tier III cities. The insurer hopes to push traditional non-market linked products as unit-linked products failed to attract customers over the last two years.

He said the LIC would continue to invest in equities in the current fiscal according to IRDA regulations. “As business and asset under management grows, the ability to invest also grows,” said Sarkar.

Roy Chowdhury said, “The market penetration for life insurance this year could reach 5 per cent (from 3.4 per cent in 2011-12).”

He said despite the declining numbers the regulator considered Ulips to have demand but only from niche buyers in the coming years. “Ulips still have a market but the right customers should be sold such products. Insurance firms should sell Ulips only to those whose appetite of risk is higher,” Roy Chowdhury said.

Research firm KPMG in a study on the insurance sector pointed out that between 2006 and 2008 there was a boom in India’s capital market, which translated into a strong performance of market-linked plans.