The Insurance Regulatory Development Authority of India (IRDAI) has mandated the dematerialization of new insurance policies by the end of the year. He urged all insurance companies to dematerialize their existing or old policies by the end of December, industry experts said.
“We expect IRDAI to issue a circular on this soon. All expected stakeholders have given their consent. It would make the insurance process very convenient for customers. So far this has not happened due to operational issues and cost issues,” a senior industry official said on condition of anonymity.
In order to speed up the process of dematerialization of insurance policies, e-KYC will also become mandatory for all insurance policies, starting from November 1, 2022. Insurance policies could be dematerialized with National Securities Depository Limited (NSDL ), Central Depository Services Limited (CDSL) or Karvy, according to industry experts familiar with the matter.
Dematerialization or “demat” will allow an insured to create a portfolio of insurance policies and store them in electronic form with an insurance repository. Simply put, one will not have to engage in any red tape while renewing his policy. This process would result in reduced transaction costs and rapid policy changes.
According to experts, it will work much the same way people keep stocks in demat format. From now on, they will be able to store their insurance policies in dematerialized form from December.
Font dematerialization is a step-by-step move that will showcase the benefits of automation and digitization, and help better serve customers, experts say.
According to Vijay Gupta, Senior Vice President of NSDL Database Management Limited (NDML), a wholly owned subsidiary of NSDL: “Think of the Electronic Insurance Account (EIA) as your online digital companion, available anytime, anywhere and gives you instant access to all your insurance assets and services on the same. The power of this tool will be realized when you see all your health, travel, auto, life and even group policies come together. You have access to it; your beneficiaries will have access/information on the insurance assets. »
“You need a duplicate, you can get it from the EIA. You need to update the address or other information, you can do it on EIA. The EIA can also be used as a KYC detail store to avoid repeat KYC. You don’t need to log into different websites to view your policies. Above all, all of this is at no cost to the policyholder. It is a regulated infrastructure with strong adherence to compliances, institutional governance and strict implementation of infosec and cybersecurity rules,” he adds.
According to experts, the movement was launched with the interest of the insured at heart.
It aims to provide better access, services and support to the insured and to speed up the claims process.
“There has been a significant increase in customer interest and adoption of digital channels and services. This move recognizes customer needs and enables market-wide institutional arrangements to serve efficiently and effectively. clients have seen and benefited enormously from the reduction in financial assets, similar benefits will now be given to insurance assets as well.It can be mentioned here that insurance assets (at least on the life side) are assets with long term and should be maintained with care and accessibility,” says Gupta.
According to Vighnesh Shahane, Managing Director and CEO of Aegas Federal Life Insurance, going paperless will be a win-win situation for insurers as well as consumers.
“IRDAI has asked for the profession’s point of view on the dematerialization of insurance contracts, but has not yet commissioned this proposal. Getting customers to open insurance accounts online will benefit all stakeholders in the system, including the regulator. The sophisticated portal proposed by IRDAI would ensure greater convenience for customers, since all their insurance policies would be consolidated in a single repository. Customers could purchase insurance policies, pay for renewals, increase service requests and settle claims more easily. For insurers, it would improve the ease of doing business, while for the regulator, it would give a real-time dashboard and insights,” he says.
He adds, however, that “there are certain operational challenges and cost issues that need to be resolved before this proposal is implemented.”
Anant Ladha, founder of Invest Aaj For Kal, a financial planning firm, said it was a welcome move by the regulator.
“In the beginning, there will be obstacles, because there are already more than 500 million policies in place. But once it’s done, it will ensure easy follow-up. Often we find that people don’t take out insurance because they either didn’t know about it or wanted to make changes but weren’t sure themselves. Dematerialization will ensure that such cases will not occur,” he says.