The Insurance Industry is likely to reach an important milestone in its mission towards digitising the insurance policies. The main objective of digitalisation is to carry out modifications during the currency of the policy with speed and accuracy. This move will bring about greater efficiency, cost minimisation and better transparency in issuance and maintenance of the policies.
We have seen in the last two decades a remarkable move initiated by SEBI in dematerialisation of shares and mutual fund holdings which brought about greater ease and hassle free system of maintenance of stocks. This dematerialisation of stock holdings proved to be a great boon to the small investors who were grappling with the problem of maintenance of stocks in physical form. On similar lines, the insurance regulator, IRDA, has initiated steps towards establishing the system.
It is expected that policy holders will be required to open an ‘E-Insurance Account’ with the insurance repository which will hold the policies of both life and non-life insurance as a portfolio. E-Insurance Policy means a policy document which is an evidence of insurance contract issued in an electronic form through an insurance repository. The insurance repository to be appointed by the Regulator would mean a company formed and registered under the Companies Act.
With the repository account opened, the policyholder will be given the right of holding his life, health, pension plan unit policies and other policy documents that he has with various insurance companies. The new system will not be thrust upon the customer unilaterally and the policyholder would have the choice of maintaining it in physical form.
Among others, the move will help the green initiative measures of corporate India as the system envisaged is going to be paperless.