The Insurance Regulatory and Development Authority of India (IRDAI) are adopting e-insurance by digitalizing all its insurance policies. E-insurance is made compulsory for all policyholders and they will have to pay a nominal amount as fees to have a physical copy of their policy. Holding the insurance policies in the digital format reduces chances of rejections due to damage or loss of the document.
The General Insurance executives have the opinion that the digitalization of the policies could take time, about two to three years to be implemented because the insurance companies have to clear their backlogs of digitizing existing policies first. The final timeline of the implementation of this policy are not announced yet. In the present state, less than 2 per cent of the policies in the country are sold in electronic format. India’s First Insurance launched its first digitized policy in September 2013.
The Life Insurance Corporation of India (LIC), the country’s largest insurer have recently decided to implement e-insurance and issue more digitized policies after resisting the move for many years. They are planning to make their policies digitized through an internal system and not by tying up with external insurance repositories.
The repositories which help the policy holders to buy and keep their policies in electronic form are similar to demat accounts that hold electronic records of policies issued to individuals. As these policies are held in the form of an electronic insurance account they are commonly known as “electronic policies”.
The cost of implementing e-insurance and digitalizing the policies is expected to vary between Rs 75-80 per person and also it includes an annual servicing fee of Rs 500-900 per person. All these costs should be borne by the insurers. This digital initiative formulated by IRDAI is expected to save about Rs 100 crore every year for the insurance sector.