When launched for the first time across the globe, the insurance demat scheme was thought to gain much favour but against expectations it did not appeal masses. And only few of the insurance subscribers have opted for it
Purpose of Insurance demat
The demat scheme or electronic keeping of insurance policies was touted for warding off the problem of losing off the policy document which is crucial to produce at the time of policy claim. Also, the scheme was thought to reduce the otherwise chaos associated with getting the claims processed for an insurance policy.
Current operation of the insurers to promote the scheme
Now with each proposal form you fill at the time of buying the insurance policy, a option exist that asks you to opt for creating or maintaining an electronic account for the policy.
Market condition per se electronic policy maintenance
As the system hasn't gained much confidence, those few takers who opt for the electronic account of their insurance policy also ask for the conventional policy bond. So, the cost factor hasn't been contained. And also of the 340 million running policies only 2% have seen the digital conversion. And 4 of the entities have been authorized to work as repositories.
The otherwise called for e-insurance policies regulations 2016, IRDAI asks for electronic insurance to become mandatory for policies whose single or annual premium values equal to Rs. 10000 or more in a year. But the move has not been implemented so far.
It is to be noted that LIC, the largest and leading state-run insurance is not part of the movement and has instead routed its own e-services plan.
Nonetheless, because of the several advantages that shall become live with the e-insurance account including the cost advantage to insurers who spend nearly Rs. 150-Rs. 200 per policy for the physical upkeep as well as several advantages to the insured, the e-insurance is about to become mandatory in next couple of years.