The Insurance Regulatory and Development Authority of India (IRDAI) has mandated the dematerialisation of new insurance policies by December 2022 aiming at increasing customer convenience. In addition, the regulatory body has asked the insurance companies to dematerialise the existing and old insurance policies. The deadline for it is set as December 2023, reported Live Mint.
Dematerialisation, or “Demat,” is the transformation of a portfolio of insurance policies from paper form to digital form. The modifiable online format of the policies allows the policyholder to store them in an electronic form with an insurance repository.
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The IRDAI is mandating dematerialisation so that a person no longer has to indulge in paperwork, in instances such as renewal or transaction, the report added.
To make the transition smoother, the IRDAI has also made eKYC mandatory for all insurance policies, starting from November 1, 2022. By doing this, the insurance regulator is aiming at speeding up the process to abide by the deadline which is the end of this calendar year.
Talking about the benefits of the initiative, Vijay Gupta, senior vice president, National Database Management Limited (NDML), in an interview with Live Mint, said, “The new proposal seeks to make the electronic issuance through EIA universal so as to provide benefits of digital and consolidated access of all policies to all insured and their nominees. This is also expected to bring significant benefits of automating the insurance issuance and servicing aspects.”
To dematerialise the policies, users can opt for National Securities Depository Limited (NSDL), Central Depository Services Limited (CDSL), or Karvya, as per the sources cited by Outlook.
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“We expect IRDAI to soon release a circular on this move. All expected keyholders have agreed to this. This would make the insurance process very convenient for the customers. So far, it has not happened due to operational challenges,” said a senior industry official.
The initiative was taken up by the IRDAI a few years back. However, it did not gain momentum due to multiple challenges, including the fact that the associated cost for insurers outweighed the customer convenience that the transition offered. Now, the insurance regulator is reviving the idea and is reported to have mandated the process across all insurance providers and policyholders.
