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The Insurance Regulatory and Development Authority of India (IRDAI) will allow companies to test products as part of its regulatory sandbox approach to test new digital and tech-based innovations before launching them in the market.
A committee, set up by the IRDAI on regulatory sandbox in the insurance sector, has submitted its final recommendations.
It suggested the setting up of a core sandbox committee with dedicated personnel to monitor and supervise the digital innovations, and also facilitate the roll-out of experiments and to provide the ecosystem required for the experimentation.
Main categories
It has said applicants can test products for up to a period of one year in five categories – insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing.
“The permission shall be granted for a period of six months, which can be extended for another six months. In no case can the proposal be allowed to go beyond 12 months,” said the report.
However, if the proposal covers 5,000 persons or completes ₹50 lakh of premium or any other parameter specified by the IRDAI, the proposal will be considered completed.
“Applicants would include insurers or insurance intermediaries or any other entity other than an individual having a minimum net worth of ₹25 lakh for the last three years,” said the report, adding that if the category involves insurance product or underwriting, then the applicant necessarily has to partner with an insurer.
The committee has also recommended strict requirements of confidentiality to protect the data of policyholders, and has proposed defined entry and eligibility criteria, boundary conditions, process flow, timelines, success factors and exit parameters for the applicants, along with appropriate controls for protection and risk management.
“At the same time, the process and criteria would be flexible to provide a conducive environment for encouraging and enabling a wide variety of experimentation, including provisions for no-enforcement action orders, waivers and relaxed reporting requirements,” it said.
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