New Insurance Policies To Be Issued Only In Electronic Format, Policy On Surrender Value Tweaked From Today, 1 April 2024

Insurance Regulatory and Development Authority of India has said that two new insurance rules are applicable from 01 April 2024.

New Delhi: From April 1, policyholders will get their insurance policy only in digital form, as per Insurance Regulatory and Development Authority of India’s (IRDAI's) notification. 

In its notification 'Protection of Policyholders’ Interests regulations' dated March 20, IRDAI made it mandatory for insurers to offer policies in demat format. Meanwhile, IRDAI has said that all policies issued in electronic form by the insurer directly to the policyholder shall also be issued in physical form, if requested by the policyholder.

"Irrespective of whether the proposal is received in electronic form or otherwise, every insurer shall issue insurance policies only in the electronic form," IRDAI said.

The regulatory body said that two conditions have to be fulfilled: 1. Provided that the Authority, on being satisfied that it is in the interest of policyholders and for orderly growth of insurance industry, allow such exemptions to this requirement and 2. Provided further that the insurer shall mandatorily seek the choice of the prospect in the proposal form for availing physical policy document.

Four insurance repositories viz CAMS Repository, Karvy, NSDL Database Management (NDML) and Central Insurance Repository of India are authorised by IRDAI for opening up of e-insurance accounts.

IRDAI has also made changes in regulation on policy surrender that will come into effect from April 1

IRDAI has notified that the surrender value is expected to remain the same or even lower if policies are surrendered within three years of the purchase.

For policies that have been surrendered from the fourth to the seventh year, the surrender value may see a minor increase, it said.

A surrender value in insurance refers to the amount paid by the insurers to the policyholder upon terminating the policy before its maturity date. If the policyholder surrenders during the policy tenure, the earnings and savings portion will be paid to him or her.