Insurance Industry Embraces Digital Era: Dematerialization Spells End of Paper Policies
Introduction
In a landmark move poised to reshape the insurance landscape, the industry is set to undergo a profound digital transformation with the mandatory adoption of paperless policies. This significant shift marks a pivotal moment as insurers embrace the power of technology to streamline processes, enhance efficiency, and improve customer experiences.
Starting April 1, 2024, new insurance policies must be held in electronic format, as mandated by the Insurance Regulatory and Development Authority of India (IRDAI). E-insurance, the process of obtaining and managing insurance policies electronically, involves purchasing insurance and storing digital policy documents in a dedicated e-Insurance Account (eIA). This eliminates the necessity for physical documents and simplifies the management of multiple insurance policies.
Understanding e-Insurance: A Digital Approach to Managing Policies
- In essence, e-insurance entails the procurement of insurance policies in a digital format. These electronic policies are housed within a dematerialized account known as an e-Insurance Account, or eIA. Within this account, individuals can manage all their insurance policies, encompassing life, health, and general insurance policies, with utmost convenience.
- Four insurance repositories, namely CAMS Insurance Repository, Karvy, NSDL Database Management (NDML), and the Central Insurance Repository of India, serve as platforms for the establishment of e-Insurance accounts in India.
- Similar to dematerialized or paperless shares, the e-insurance account framework revolves around the issuance and retention of policies in digital format. Many private insurers routinely establish e-insurance accounts for their policyholders. These accounts are owned by policyholders, affording them the option to purchase and maintain additional policies in electronic form.
Enhanced Accessibility: Anytime, Anywhere Policy Retrieval
- An e-Insurance Account offers multiple benefits. Firstly, it eliminates the need to manually manage and track policy documents, reducing paperwork and simplifying the claims initiation process. Even for those who have shifted to online insurance, the task of maintaining records for each policy separately remains. However, with the e-Insurance Account, all policy documents are consolidated in one accessible location. This account is easy to access, convenient, and saves both time and hassle.
- Furthermore, it's important to note that only one e-Insurance Account (eIA) will be required to manage all your insurance policies. The Insurance Regulatory and Development Authority of India (IRDAI) has introduced an industry service called i-Trex to prevent duplication of eIA across insurance repositories.
- Once a policyholder establishes an e-Insurance Account, they can effortlessly add all their insurance policies to it. The repository will then liaise with insurers to digitize the policies and integrate them into the account. However, it's important to understand that unlike the flexibility allowed in maintaining multiple share demat accounts, policyholders are restricted to having only one e-insurance account per individual.
- With insurance policies in digital format, concerns about misplacing important documents become obsolete. Insurance repositories provide secure storage for your policies, ensuring easy access whenever necessary. This digitization not only eradicates the hassle of paperwork but also minimizes the risk of document loss. Moreover, it simplifies the process of updating details, such as address or contact number changes, across multiple policies.
Requesting Physical Copies: Exploring Alternatives to Digital Storage
- The option to hold policies in physical form will remain available, allowing policyholders to retain older policies in traditional documentation. Additionally, exemptions may be granted by IRDAI for new policies in exceptional circumstances.
- Policyholders can insist on receiving physical copies while completing the proposal form for purchasing insurance. Alternatively, even if not specified during the proposal process, individuals can always request their insurer to dispatch physical documents.
- Further IRDAI has not provided specific guidelines on converting existing policies into digital format, policyholders can inquire with their insurer about the availability of such a service.
Effortless and Cost-Free: Accessing an e-Insurance Account
- Opening an e-insurance account can coincide with the purchase of a new policy, whereupon the policy will be automatically credited to the account. In such instances, insurers will oversee the entire process, facilitating seamless integration.
- Converting existing physical insurance policies into electronic form is also an option. To open an e-insurance account, one can download the necessary forms from the portals of insurance repositories. Submission of KYC documents such as Aadhaar and PAN to the repository is required. Alternatively, completing the KYC process online using Aadhaar or DigiLocker is also possible.
- The opening of your e-insurance account incurs no charges. Currently, insurers will cover the associated costs, estimated to be around Rs 35-40.
- As an e-insurance account serves as a unified repository for all policies from various insurers, it guarantees that your family members can access all benefits in your absence. This eliminates the need for them to search through your files to determine the number of policies you have purchased.
Conclusion
In conclusion, the mandatory adoption of paperless policies represents a watershed moment for the insurance industry, signalling a fundamental shift towards digitalization and innovation. By embracing electronic insurance, insurers can unlock new opportunities for efficiency, convenience, and customer engagement, ultimately driving value for both insurers and policyholders alike. As April 1, 2024, approaches, the industry stands on the brink of a digital revolution that promises to redefine the future of insurance.
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