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The Insurance Regulatory and Development Authority of India (IRDAI) will start receiving applications for regulatory sandbox from September 15, giving an opportunity to insurers and insuretech firms to experiment more with technology.
“The regulatory sandbox will be opened from September 15 for 30 days till October 14. Its purpose is to introduce a ‘test and use process’ and help manage risk better for insurers,” said Sujay Banarji, Member, IRDAI, on Friday.
Addressing a CII conference, Banarji said the IRDAI is also testing applications to allow companies apply online.
A regulatory sandbox will have a number of benefits, including best-in-class service to customers, reducing the time to market products at potentially lower costs, better access to finance, more innovative products, regulatory clarity, and limited failure consequences, he noted.
‘To foster collaboration’
“Regulatory sandbox will foster collaboration and further the interests of all stakeholders, that is regulator, insurance companies, start-ups, and end consumers,” Banarji stressed.
Meanwhile, addressing the conference, Randip Singh Jagpal, Chief General Manager, IRDAI, said that using the sandbox, innovation is expected both in products and services as well as technology. “In terms of technology, this is expected in mobile technology, data analytics, blockchain, API integration, machine learning, and AI in designing and rating of products,” he said, adding that in products and services, innovations are expected in terms of digital KYC, smart contracts, cyber security, and developments around marketplaces.
According to the IRDAI notification, insurers, intermediaries, any person other than an individual with a net worth of at least ₹10 lakh for the last financial year, can individually or jointly seek permission from the IRDAI to participate in the regulatory sandbox.
The regulations will remain in force for two years.
“The objectives of these regulations are to strike a balance between orderly development of insurance sector on one hand and protection of interests of policyholders on the other, while at the same time facilitating innovation, and to facilitate creation of regulatory sandbox environment and to relax such provisions of any existing regulations framed by the authority for a limited scope and limited duration, if such a relaxation is needed,” the IRDAI had said in the notification.
The categories of application include insurance solicitation or distribution, insurance products, underwriting and policy, and claims servicing.