Good News: IRDAI plans to move insurance from paper to digital. It has mandated the dematerialisation of insurance policies by this year. All the new insurance policies will have to be compulsorily issued in dematerialised (demat) form.
December 2023 has been set as a deadline to dematerialise existing insurance policies. To speed up the process of digitalizing the insurance policies, starting November 1, eKYC will be mandatory for all insurance companies.
Years ago, IRDAI took the demat initiative, but due to certain challenges, did not gain any momentum. Now, IRDAI pushed the idea and is reported to have mandated dematerialisation across the insurance industry. However, IRDAI has not yet released a circular on this move.
What Does IRDAI Mean by the Dematerialisation of Insurance Policies? What Will Exactly Happen?
Similar to the dematerialisation of shares, dematerialisation of insurance policies means transforming insurance portfolios from physical form (paper) to digital form (demat / electronic form).
Separate e-insurance accounts (eIA) will be kept for different customers. All the policies of a customer will be kept in a single eIA.
Insurance repositories like NSDL, CDSL, CAMS, and Karvey hold these eIA accounts.
Benefits of Dematerialisation
Help in keeping a watch on the entire sector’s activities on a single digital platform. It will provide a real-time dashboard to the IRDAI. This would lead to better monitoring and regulation of the industry.
The e-insurance account will give all policyholders and their nominees, digital and consolidated access to all the policies at the click of a button.
The policyholders will be able to keep a track of all their insurance policies, be it, life and/or non-life.
It will be easier for policyholders to renew their policies, update their contact details and nominee details, etc.
To Insurance Companies
Dematerialisation will help insurance companies in better risk management.
It will also help in saving the cost of printing and delivering policies.
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