Millennium Post

Insurance watchdog IRDA mulls depository for paperless policies

The Insurance Regulatory and Development Authority is mulling over a proposal to set up a depository that will allow customers to hold policies in paperless form much like investors holding equity shares in demat accounts.

'We are thinking of having an insurance depository like the one in the stock (market). It is still in a formative stage,' IRDA member (life) Sudhin Roy Chowdhury told reporters on sidelines of the Insurance Summit on Friday.

He said that instead of holding policy bonds in paper form, the customers would hold them in demat paperless form.

The IRDA official said a separate autonomous body would be formed which would operate the depository, adding that the regulator would lay down the regulations.

However, Roy Chowdhury said insurance customers would have the option to switch over to paperless form and would not be mandatory as in the case of stock market.

He said the capital-intensive insurance sector required foreign investments.

The IRDA member said the Insurance Bill is expected to get approved in Parliament and thereby the FDI limit would increase from the present level of 26 per cent to 49 per cent.

'The insurance sector needs a lot of capital and FDI is one source,' he said.

He also said insurers should take steps to stop misselling of products by their finanancial advisors.

He said the regulator would come up with new guidelines for micro-insurance within the current financial year.

'IRDA has asked insurance companies to design four-five new cost-effective micro-insurance products. At the same time these products should provide better returns to investors,' Roy Chowdhury said.
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