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Saturday, January 11, 2014

What are electronic Insurance Repositories

IRDA has formally launching the Insurance Repository System (IRS) and you can now demat your insurance policies. Here's what you should know about this new concept. READ ON..

What is an insurance repository
It is a facility that allows you to hold insurance plans in the demat form. As is the case with shares and bonds, which can be held in a demat account with a depository, you can keep your insurance policies in an e-insurance account with an insurance repository.

How can you open an e-insurance account
A policyholder can open an e-insurance account with any of the five repositories approved by IRDA. Following are the approved e-insurance providers:
  • NSDL Database Management
  • Central Insurance Repository
  • SHCIL Projects
  • CAMS Repository Services
  • Karvy Insurance Repository. 
IRDA has also stipulated that one individual can have only one e-insurance account.

What if you have policies from different insurers
Even if you have policies from multiple insurance companies, they can be stored in the same account. Right now, only life insurance policies and pension plans are being allowed to be held in e-insurance accounts. However, the facility will eventually be extended to health, car, home and other forms of general insurance.

What are the advantages
  • You don't run the risk of losing the physical documents. This used to be a concern especially because insurance policies are typically long term contracts spanning even the entire life span and keeping a safe custody of these physical papers is definitely a challenge.
  • It will become easier to track your policies as the details will be available at one place. You won't have to go to different offices of different insurance companies anymore.
  • Your paperwork will reduce. With the repository as the single point of service, updating details like change of address or nomination will become easier, faster and more reliable. Today, you will have to go to every insurance provider for change of address or other personal details.
  • It will reduce mis-selling because the agent will not be able to keep the new insurance policy till the expiry of the 15-day free-look period.

What is the cost of this account
The policyholder has to pay nothing to open an e-insurance account or hold the policies in the demat form. All the services provided by insurance repositories are also free. You don't need to pay anything for converting the existing policies into electronic form. The insurance companies will recoup their costs from the savings in policy issuance and delivery.

What to do when you buy a new policy
If you have an e-insurance account, buying a new policy in the electronic form becomes easier. Just quote your account number in the application and opt for a policy in the electronic form. Since the KYC documents would already have been submitted and verified, the insurance firm won't have to repeat the process. The policy will reflect in your account after it is issued.

How do you make changes in a policy
The insurance repository is the single point of service for all your requirements, so you will need to submit your request to it. If the change is at the account level (address or contact details), the repository will execute it after due verification and then intimate the insurance company. If the change is at the policy level (nomination, sum assured or account details), the repository will forward the request to the insurance company.

How can the existing policies be converted to the demat form
All the existing life insurance and pension plans (and other policies when it is extended to all) will need to be converted into the demat form if you want them stored in the e-insurance account. You will need to fill up a request form for conversion and submit your policy documents to the insurer.

So, get e-enabled on your insurance policies and make your life simpler and more efficient.

Cheers


Manoj Arora
Freedom can buy you what money cannot !!

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