The regulator has also asked insurance companies to dematerialize existing and old insurance policies. The deadline for this is December 2023, Live Mint reported.
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The Insurance Regulatory and Development Authority of India (IRDAI) has mandated the dematerialization of new insurance policies by December 2022 with the aim of increasing customer convenience. In addition, the regulatory body has asked insurance companies to dematerialize existing and old insurance policies. The deadline for this is December 2023, Live Mint reported.
Dematerialization, or “Demat”, is the transformation of a portfolio of insurance contracts from paper to digital form. The online editable format of the policies allows the insured to store them in electronic form with an insurance repository.
The IRDAI mandates dematerialization so that a person no longer has to engage in paperwork, in cases such as renewal or transaction, the report adds.
To ease the transition, IRDAI has also made eKYC mandatory for all insurance policies, effective November 1, 2022. In doing so, the insurance regulator aims to expedite the process to meet the deadline which is the end of this calendar year.
Speaking 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 aims to make electronic issuance via EIA universal. in order to provide benefits. digital and consolidated access to all policies for all policyholders and their representatives. It should also bring significant benefits in automating insurance issuance and service aspects.
To dematerialize the policies, users can opt for National Securities Depository Limited (NSDL), Central Depository Services Limited (CDSL) or Karvya, according to the sources cited by Outlook.
“We expect IRDAI to issue a circular on this soon. All expected keyholders agreed to this. It would make the insurance process very convenient for customers. So far this has not happened due to operational issues,” a senior industry official said.
The initiative was taken over by IRDAI a few years ago. However, it did not gain momentum due to multiple challenges, including the fact that the associated cost to insurers outweighed the convenience offered to customers by the transition. Today, the insurance regulator is reviving the idea and would have imposed the process on all insurers and policyholders.