IRDAI proposes to have insurance policies in Demat format by December 2022

The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to mandate the dematerialisation of all new insurance policies by December this year in a bid to digitise insurance policies. Dematerialisation means transforming physical documents into a modifiable online format. 

With dematerialisation or 'Demat', a policy holder can create a portfolio of insurance policies he has and store them in an electronic form with an insurance repository. With this rule, policyholders can have only one ‘e-Insurance Account’ (eIA) with an insurance repository of their choice, a report in CNBC-TV18 stated.  
IRDAI had reportedly started the demat initiative a few years back, but it did not take off due to operational challenges. Now, the insurance regulator is pushing the idea to ensure a robust electronic mode of policy solicitation, servicing, and storage. From November 1, eKYC will also become mandatory for all insurance policies, which will further help in dematerialising insurance policies. 
The IRDAI has also proposed setting up a new platform for the sale, servicing, and claims of insurance policies, which will be operational from this December. 
In the last few years, insurance repositories were set up with the aim of opening an eIA, which can be a repository of all insurance policies of a customer.   
At present, there are four insurance repositories – NSDL National Insurance Repository, CDSL Insurance Repository Ltd, Karvy Insurance Repository Ltd, and CAMS Insurance Repository Services Ltd.  
The insurance repository maintains the Electronic Insurance Account (eIA) of the insured person and all insurance policies (life/non-life/group) can be stored and accessed through this facility. In the last few years, insurance repositories have helped in electronic issuance, storage, and services for over 10 million insured persons. 

Benefits of demat of insurance policies  

The process of dematerialisation of insurance policies is similar to dematerialisation of shares and stocks. The basic difference is stock demat accounts allow individuals to buy and sell shares, whereas insurance holders cannot do this with their account.   

The demat insurance account will provide a one-stop window for customers to view all their insurance policies -- life, motor, or health. When a customer buys a policy, the insurance company will credit that policy in the customer's repository account.