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Insurance regulator IRDAI set to meet insurance CEOs on dematerialisation of policies
September 06,2022 23:12
The insurance regulator is meeting heads of all life and general insurance companies on Wednesday to discuss dematerialisation of insurance policies, which is aimed at increasing customer convenience.

Dematerialization is the conversion of physical documents into a modifiable online format.

The initiative was initiated by the insurance regulator a few years ago but did not take off as the operational challenges and associated costs for insurers outweighed the customer convenience it was supposed to provide.

The regulator now wants to revive the idea and will hold consultations with insurance companies, discuss the pros and cons of the facility and examine reasons for little interest in it.

Dematerialization of life insurance policies has been promoted by the Insurance Regulatory and Development Authority of India (Irdai) to ensure robust electronic mode of policy solicitation, servicing and storage. Insurance repositories were set up with the aim of opening an eIA (e-Insurance Account) which acts as a repository of all insurance policies of the customer.

Currently, there are four insurance repositories - NSDL National Insurance Repository, CDSL Insurance Repository Ltd, Karvy Insurance Repository Ltd, CAMS Insurance Repository Services Ltd.

Dematerialization of insurance policies is similar to dematerialization of shares, the only difference is that in the case of shares, customers are allowed to transact like buying and selling shares. However, this feature is not allowed in dematerialized insurance policies. It will provide a one-stop window for customers to view all their insurance policies--life, motor or health. When a customer buys a policy, the insurance company will credit that policy in the customer's repository account.

“Irdai had initiated dematerialisation of insurance policies some time back, but its uptake was not satisfactory. The regulator has said all existing customers have to be transferred to repositories within the next 12 months. It is going to be a challenge for large insurers because of their customer base. It will be an added cost for them as this will be an operational challenge. But it will add to customer convenience,” said Vignesh Shahane, MD&CEO, Ageas Federal Life Insurance.

Atri Chakraborty, Chief Operating Officer, IndiaFirst Life Insurance, said, “Irdai has issued draft guidelines where it is mandating all insurers to issue eIA to promote digital adoption. There are commercials that have been agreed between IRs and insurance companies for each transaction type and the commercial would vary based on transaction volume. As the adoption of eIA increases, the unit transaction cost would reduce and hence commercials would evolve over a period of time.”

“It's beneficial to the customers, since they would have one eIA, which can serve as their repository for life, general and health insurance policies. The IRs also have the capability to transact and carry out service requests of customers pertaining to their policies.”
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