Ever since the Dematerialization (or simple Demat) of physical equity shares started, it has been accepted by one and all and very rarely do we find people holding physical shares, even if they were obtain well before Demat process started. Bringing the same benefit to Insurance, we will soon have Dematerialized Insurance policies. So no more issuing of physical Insurance bonds/certificates; just an online account at the DP (depository participant) to hold all your policies will do.
If everything goes as planned, we should see Demat policies from the next financial year (April, 2012), according to President of Insurance brokers association Sohanlal.
Also, IRDA, SHCIL, KARVY, CDSL, NSDL, CAMS are already fully hooked into making this possible as soon as possible. As always (like Insurance policy portability), the demat process will be first implemented in less dense Motor Policies, then to Health Policies and finally the mega Life Insurance policies.
