New e-Insurance rule: Starting April 1, 2024, you must keep your insurance policies in electronic format, similar to the way investors store shares in a demat account. The Insurance Regulatory and Development Authority of India (IRDAI), in its “Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers Regulations, 2024,” has mandated that every insurer must have a board-approved policy for issuing insurance policies in electronic form, as stated in its notification.
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ET quoted the regulator stating that all insurers must issue insurance policies in electronic format, regardless of how the proposal is received. However, insurers can seek exemptions from this requirement under two conditions: first, if the authority deems it beneficial for policyholders and the insurance industry’s growth, and second, insurers must ask the prospect’s preference for receiving a physical policy document in the proposal form.
What exactly does this mean for policyholders? Here are the key aspects of this new rule.
What is e-Insurance?
e-Insurance, as the name implies, involves purchasing insurance policies digitally. These policies are stored in an electronic format called e-Insurance Account (eIA), which functions similarly to a demat account for shares. With an e-Insurance Account, you can conveniently manage all your insurance policies, including life, health, and general insurance.
In India, there are four main insurance repositories—CAMS Insurance Repository, Karvy, NSDL Database Management (NDML), and Central Insurance Repository of India—that facilitate the opening of e-Insurance accounts.
Benefits of e-Insurance Accounts
An e-Insurance Account offers numerous benefits. Firstly, you can say goodbye to the hassle of managing multiple policy documents because they’re all stored in one place. This means less paperwork and stress, especially when making claims. Vivek Bengani, CEO of CAMS Insurance Repository, emphasizes that e-Insurance Accounts are easy to access, convenient, and save both time and hassle.
Moreover, an e-Insurance Account facilitates seamless communication between policyholders and insurance companies. If you update your contact information or address in your eIA, all your insurers will automatically have the updated details. Similarly, any updates from your insurer will be visible in your eIA, making policy maintenance much simpler.
Since e-Insurance is in a digital format, you can bid farewell to worries about misplacing important documents. These policies are securely stored in insurance repositories, ensuring that you can access them whenever needed. Siddharth Singhal, Business Head of Health Insurance at Policybazaar.com, says that this digitization reduces paperwork, minimizes the risk of document loss, and simplifies the process of updating details across multiple policies, such as address or contact number changes.
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Opening an e-Insurance Account
Opening an e-Insurance Account is a simple process. When purchasing a new insurance policy, you can specify where you want to open your account, and the insurer will handle it for you. You’ll need to provide necessary documents like KYC (Know Your Customer) documents. Alternatively, you can directly open an eIA through repositories.
It’s important to note that this service is entirely free of charge. You won’t incur any costs to open an eIA; your insurer covers the expenses, as emphasized by Bengani.
Additionally, keep in mind that you’ll have one eIA for all your insurance policies. Bengani explains that IRDAI has introduced an industry service called i-Trex to prevent duplicate eIA across insurance repositories. Once you have an e-Insurance Account, you can add all your insurance policies to it. The repository will then coordinate with insurers to digitize them.
So, unlike multiple demat accounts, you only need one eIA to manage all your insurance policies.
Optional physical documents
Bengani notes a substantial increase in the number of e-Insurance Accounts (eIAs) in India following the Covid-19 pandemic. Singhal was quoted as saying, “With all insurance policies, be it life, pension, health or general, eligible to be held in the electronic format and accessible through an e-Insurance Account, managing insurance plans becomes more convenient than ever before.”
However, policyholders still have the option to receive policy documents in physical format if preferred. The regulator specifies that insurers must issue physical copies of policies issued electronically upon the policyholder’s request.
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Converting existing policies
Currently, IRDAI has not provided specific guidelines for converting existing policies into digital format. However, Bengani suggests contacting your insurer to inquire whether they offer such a service.
