Starting from April 1, 2024, it is compulsory to hold your insurance policies in electronic format, similar to how investors hold shares in a demat account.
In a notification “Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers Regulations, 2024” dated March 20, 2024, the Insurance Regulatory and Development Authority of India (IRDAI) said, “Every insurer shall have in place a Board approved policy for insurance policies issued in electronic form…”
“Irrespective of whether the proposal is received in electronic form or otherwise, every insurer shall issue insurance policies only in the electronic form,” the regulator said. To issue policies in the electronic format, the insurers must fulfill two conditions: a) Provided that the authority, on being satisfied that it is in the interest of policyholders and for orderly growth of the insurance industry, allow such exemptions to this requirement; b) Provided further that the insurer shall mandatorily seek the choice of the prospect in the proposal form for availing physical policy document, IRDAI said.
What are policies in electronic format? How is it going to help the policyholders? ET Wealth Online explains.
What is an e-Insurance?
As the name suggests, e-Insurance simply means buying insurance policies in a digital format. Your electronic insurance policies will be held in a demat account termed e-Insurance Account, or eIA. You can manage all your insurance policies — life, health, and general insurance policies through an e-Insurance Account.
There are four insurance repositories – CAMS Insurance Repository, Karvy, NSDL Database Management (NDML), and Central Insurance Repository of India that facilitate the opening of e-Insurance accounts in India.
Insurance rule change: How is an e-Insurance Account going to help you?
An e-Insurance Account has more benefits than one. Firstly, you no longer need to keep a record of your policy documents. Less paperwork and hassle while initiating claims. Even if a lot of people have already transitioned to online insurance, they have to keep a record of every policy separately. “Under e-Insurance Account, all the policy documents will be kept in one place. e-Insurance Account is easy to access, convenient, and saves time and hassle,” says Vivek Bengani, CEO of CAMS Insurance Repository.
An e-Insurance Account acts like a two-way street between insurance companies and policyholders. If you have updated any details such as contact number or address, you can change it in eIA and all your insurers will take an account of it. Similarly, if your insurer has any update for you, you can see it in eIA. So, maintaining your policy will become way more easier.
As it is in digital format, you don’t have to worry about misplacing any important documents. Insurance repositories offer secure storage for your policies, so you can access them whenever you need to. “This digitisation eliminates the hassle of paperwork, reduces the risk of losing documents, and simplifies the process of updating details such as a change in address or contact number, etc., across multiple policies,” says Siddharth Singhal, Business Head – of Health Insurance, Policybazaar.com.
Opening an e-Insurance Account is simple, free
Opening an e-Insurance Account is quite simple. While buying a new insurance policy, you can give your preference where you want to open your account and the insurer will do it on your behalf. You need to provide the necessary documents such as KYC documents. You can open an eIA directly through repositories as well. “Do keep in mind that the entire facility is free of cost. You don’t have to bear any cost to open eIA, your insurer will pay for it,” says Bengani.
Another thing you need to keep in mind is that there will be one eIA for all your insurance policies. Bengani adds, “IRDAI has already created an industry service i-Trex, which ensures that there is no duplication of eIA across insurance repositories.” Once the policyholder has an e-Insurance Account, they can add all their insurance policies to it. The repository will contact insurers and get them digitised.
So, unlike multiple demat accounts, you can open only one eIA.
Is it mandatory to buy insurance policies in electronic format?
After Covid-19, the number of eIAs in India has significantly increased, says Bengani. “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,” says Singhal.
However, you do have an option to get the policy documents in physical format if you want. The regulator states, “All policies issued in electronic form by the insurer directly to the policyholder shall also be issued in physical form if requested by the policyholder.”
Can you convert your existing insurance policies into e-Insurance policies?
At present, there are no specific guidelines from IRDAI regarding converting the existing policies into digital format. However, you can ask your insurer if they offer the service, says Bengani.
