Insurance policies in dematerialized form
Insurance policies in dematerialized form could soon be a reality with the Insurance Regulatory and Development Authority constituting a panel to look into electronic policies.
According to insurance companies, the issue of policies in demat form will significantly bring down costs and improve efficiency. It would also make online purchase of insurance plans much easier and benefit life as well as non-life companies. In life companies policies such a move would enable policies to be held in demat form just like mutual funds and other securities. In the non-life industry, it would facilitate trade by allowing shippers use electronic letters of credit.
While the industry is eyeing electronic policies in the form of statements through email, the IRDA wants to consider a complete overhaul of the back end as well. This would involve transferring the entire database of policyholders to a central depository such as NSDL or CDSL. However, some of the companies are reluctant to share their databases as they feel that it would increase costs and not serve much of a purpose since policies are not traded.