New insurance policies will be issued only in electronic format from April 1

E-insurance mandatory from April 1

If you decide to buy insurance after April 1, your insurer will issue the policy only in digital form. This is in line with the Insurance Regulatory and Development Authority of India’s Protection of Policyholders’ Interests regulations that make it mandatory for insurers to issue policies in dematerialised form.

The option was introduced in 2013, and now four insurance repositories – CAMS Repository, Karvy, NSDL Database Management (NDML) and Central Insurance Repository of India – facilitate the opening of e-insurance accounts.

The regulator, insurers and other stakeholders say e-insurance will help policyholders and the entire insurance ecosystem.

Also read: IRDAI’s status quo on surrender charges a relief for insurers, but setback for policyholders

What are e-insurance accounts?

Like dematerialised or paperless shares, the e-insurance account framework involves issuing and holding policies in digital form. Most private insurers already open e-insurance accounts for policyholders. It belongs to policyholders who can choose to buy and hold other policies in electronic form.

Now, the regulator has made it mandatory for insurance companies to issue only digital policies from April 1.

“Irrespective of whether the proposal is received in electronic form or otherwise, every insurer shall issue insurance policies only in the electronic form,” IRDAI’s final regulations said.

However, do note that unlike multiple share demat accounts that one is allowed to maintain, there can be only one e-insurance account per policyholder.

What if I want to hold my policies in physical form?

This option will still be available, and you can continue to hold older policies in physical form. This apart, even for new policies, IRDAI has said exemptions could be made in exceptional circumstances.

Also, you can insist on a physical copy while filling up the proposal form to buy insurance. Even if you do not do so, you can always ask your insurer to dispatch physical documents to you.

How can a policyholder open an e-insurance account?

An e-insurance account can be opened at the time of buying a fresh policy, which will then be credited to the account. In such cases, insurers will facilitate the entire process.

You can also convert existing, physical insurance policies into electronic form. You can open an e-insurance account by downloading the forms from the portals of insurance repositories. You will need to submit KYC documents such as Aadhaar and PAN to the repository. You can also complete the KYC process online using Aadhaar or DigiLocker.

One e-insurance account will host policies across insurers and segments.

“IRDAI has already created an industry service i-Trex, which ensures that there is no duplication of eIAs (e-insurance accounts) across insurance repositories. Once the policyholder has an insurance account, they can add all their policies into it and their repository will contact insurers and get them digitised,” Vivek Bengani, CEO of CAMS Rep, told Moneycontrol when the draft guidelines came out.

Also read: IRDAI clears the decks for Galaxy Health Insurance, rolls out revised regulations for industry, policyholders

What is the fee that I will have to shell out?

Your e-insurance account will be opened free of cost. For the moment, insurers will bear the cost, which is estimated at Rs 35-40.

What are the benefits of holding policies in e-insurance accounts?

You can keep track of all your policies – life, health, and motor – in a single account. Through the account, you can buy insurance policies, pay renewal premiums, raise service requests and file claims.

While most insurance companies issue timely renewal reminders via email or text messages, there is a chance that some may not. If you store all your policies in an e-insurance account, there is little scope for missing out on those reminders (you will get alerts from the e-insurance account).

More importantly, if you wish to update your bank account, address or contact details across policies, you only need to make the changes in your e-insurance account. You need not intimate individual insurers separately.

These accounts will also do away with the need to go through the KYC process repeatedly when you buy policies from different insurers.

How can policyholders’ family members benefit from e-insurance accounts?

For one, it eliminates the risk of misplacing policy documents. "It's not easy for nominees to locate physical policy copies when they need them at the time of filing claims," says Siddharth Singhal, Business Head, Health Insurance, Policybazaar.com.

Since an e-insurance account is a consolidated repository of all policies across insurers, this ensures your family members get access to all the benefits in your absence. They need not scour through your files to figure out how many policies you had purchased.

Also, currently, when you merely have an online copy in your mailbox, you or your family will still need to preserve the physical policy document and produce it while claiming benefits.

An e-insurance account will do away with this hurdle. This is thanks to the concept of authorised representatives who have to be appointed by the policyholder. These individuals can help family members access the policy's benefits in the absence of the policyholder.