Now all policies be it life, health or motor can be dematerialized and maintained under a single account. With the introduction of demat to the insurance business, including automatic reminders for premiums insurance buyers will be able to convert all their policies into electronic records under one common folio, irrespective of the company or even the nature of policy.
Insurance regulator IRDA has issued licences to five promoters to set up insurance repositories – National Securities Depository (NSDL), Central Securities Depository (CDSL), Stock Holding Corporation’s SHCIL, Karvy Group and Cams. These five firms have their systems in place, which are being beta-tested with a small number of policies.
According to IRDA chief T S Vijayan, insurance companies will have a huge cost incentive in encouraging customers to hold their policies in electronic form as costs will come down substantially from around Rs 600 per policy.
“This is a path-breaking initiative akin to demat of shares. By bringing down cost of delivery, it will enable the industry to come up with low-cost policies which are not viable today because of the cost of delivery,” said M Ravichandran, president, Tata AIG General Insurance. He added that besides lowering costs it will improve ‘contactability’ of the policyholder and address the issue of policy documents being misplaced.
Similarly, in the case of life insurance companies, policyholders often move house without informing the company of the change in address. But because motor and health insurance are annual contracts, the addresses are updated regularly.
