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Now Insurance Policies go Demat

With the launch of Insurance Repository System (IRS), one more aspect of our life has changed its form from Physical to Digital.

So similar to holding your shares, bonds, mutual funds etc. in electronic form, you can henceforth hold your insurance policies too in demat form. You need only one demat account to hold all your policies and from various insurers. (Though presently only the life insurance and pension plans can be held electronically, in due course of time other types of insurances such as vehicle, health, etc. would also be digitized.)

In this regards IRDA has approved five repositories viz. NSDL Database Management, Central Insurance Repository, SHCIL Projects, CAMS Repository Services and Karvy Insurance Repository.

Even your existing physical policies can be converted into electronic ones, by submitting the necessary application to your insurer.

The benefits of having your policies in demat form are the usual ones i.e. no paperwork, consolidated holding, one-time KYC documentation, ease in making changes, no risk of loss/damage, automatic reminders, etc.

And the best part ... all this for free. 

Insurers are expected to save a lot if they don't have to issue and maintain physical policies. Hence, they will bear the repository expenses. In other words, you don't have to pay anything either to open an e-insurance account or for holding the policies in demat form or for converting the existing ones.   

Of course, the benefits of e-insurance will not be as significant as seen with shares or other securities. This is so because 
- we normally have lot more no. of shares and other securities but only a few insurance policies; 
- buying/selling shares, etc. is lot more frequent than buying insurance; 
- dividends, bonuses, and such other regular events are normally absent in insurance policies; 
- traffic police can ask you to show your insurance; etc. etc.

By the way, this process to go digital is still in nascent stages. It may take a few months to become fully operational as the repositories and the insurers are in the process of tying up the loose ends.

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