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With fintechs taking an active part in providing customised and out-of-the-box solutions, insurance products are likely to get more innovative. The Insurance Regulatory and Development Authority of India (IRDAI) has invited applications to make use of the ‘Regulatory Sandbox Approach’ to foster innovation and growth in the insurance sector.
Insurers, as well as fintech companies interested in customised products and solutions, can make use of the regulatory sandbox. A sandbox is a workspace, where insurers and other firms with stake in insurance, can ideate, experiment, test, and innovate financial products without worrying about regulatory norms for a specific period of time. The other applicable norms were already announced by the regulator in the form of the IRDAI (Regulatory Sandbox) Regulations 2019 last month.
The objective is to “strike a balance between orderly development of insurance sector on one hand and protection of policyholders on the other, while at the same time facilitating innovation”, IRDAI said in a release.
The regulatory sandbox has been created with the aim to use innovative companies in a way that provides flexibility in dealing with regulatory environment. The applications will be accepted from September 15 to October 14.
The norms include definition of an applicant as an insurer or insurance intermediary or a person other than an individual having a net worth of ₹10 lakh and a standing of one financial year, among others.
They allow promoting innovation in the areas of insurance solicitation and distribution, insurance products, underwriting, policy and claims servicing.
The regulations also provide for relaxation of one or more provisions, subject to the conditions given above. The maximum period for which the relaxation can be granted ranges from six months to one year.
“This is one step forward and a progressive move, and I expect good response from all stakeholders,” RM Vishakha, Managing Director and Chief Executive Officer, India First Life Insurance Company, told BusinessLine.
“The final outcome depends on the distance the regulator prefers to go while evaluating the applications and other approvals. IRDAI has been a tough regulator and our hands have generally been tied on experiments and innovations. It is a good move but the outcome needs to monitored,” said the CEO of large private life insurance company who did not wish to be named.
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