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There are expectations of a new ‘UPI (Unified Payment Interface) moment’ in the insurance segment.
Last year, the Insurance Regulatory and Development Authority of India (IRDAI) had mooted the Bima Sugam portal as a one-stop shop for all insurance stakeholders. Last month, the IRDAI released an exposure draft on the regulatory framework for the proposed portal relating to its establishment, functioning and governance.
What’s more, all types of insurance policies — general (motor, travel, health, fire, etc.) and life — would be available for customers and all others in the industry ecosystem.
For lay customers, the whole idea may be a bit daunting at first sight. But it isn’t that complex.
Read on for more about the proposed Bima Sugam portal, its benefits and the recent IRDAI exposure draft, to make the most of the marketplace when it becomes functional by the end of this year or a tad later.
Ease of transaction
Bima Sugam is conceived to be an e-marketplace of sorts for insurance. Therefore, all stakeholders would form a part of it. So, policyholders, insurance firms, agents, existing online aggregators offering products, third-party administrators, etc., are all included in the digital ecosystem.
There would be no charges to be paid by policyholders for using the portal.
All insurance companies would be part of the portal and offer their products to policyholders.
Customers can buy all types of insurance products from those offering it, by choosing from among the variety available. And, as mentioned earlier, it would be a one-stop shop for all types of insurance requirements, including term, health, motor, travel, fire, home, and ULIPs (unit-lined insurance plans).
Policyholders can buy products directly from insurance companies.
However, insurance agents and intermediaries can also make use of Bima Sugam. They would also be onboarded in the Bima Sugam portal. So, these agents can service their clients online by enrolling them in the portal.
Registration of claims, too, can be done on the portal with the respective insurer or third-party administrator.
Filing of complaints or disputes would also be facilitated via the portal.
Thus, a single-point marketplace quite like an online e-commerce digital system is sought to be built, hence buying of policies, paying of premiums, registering of claims, etc., are expected to be smooth processes.
The digital infrastructure
Now, the IRDAI has released a new draft on the nuances of the portal itself and has asked for comments from all stakeholders.
Specifically, the regulator wants the portal to be run as a not-for-profit company under Section 8 of the Companies Act. The portal anyway would be free to use for all consumers.
Some of the other proposals made in the exposure draft are:
The company running Bima Sugam should be widely held by all insurance companies spread across life, health and general segments. No single entity would have a controlling stake.
There would be two directors from the IRDAI’s side. The company would have a Chairperson and CEO.
A robust risk management committee is to be formed for monitoring all types of risks to make it safe for customers.
Most importantly, the IRDAI has proposed a consent-based architecture for the services provided. This means, the customer would have to approve any and all data collected and used by the portal or insurance companies towards issuing policies, servicing claims, etc.
That is, customer consent would be at the heart of all acceptance to data given or taken, with high degree of confidentiality being maintained.
Making best use
Though not strictly comparable, there are parallels to widely owned marketplaces in the mutual fund industry — MF Utilities that is owned by all fund houses, MFCentral that is owned by KFin and CAMS, etc. But it remains to be seen how successful they become over the years.
Bima Sugam is no doubt a great initiative to smoothen insurance purchases and settlement of claims and so on.
And taking all processes online would ensure greater transparency and quicken matters for customers and other stakeholders. Costs (premiums) also could come down significantly in some cases as the physical layer would be cut and servicing would be smoother.
But as with all financial products, customers should be careful about what policies they buy. For most investors, a term cover and health insurance policy would suffice. A few others may want ULIPs and other products for their goals.
In all cases, unless you are well-equipped to make informed decisions on product selection, you would be better off taking help.
Use the services of an agent if required and ask for detailed product explanation. Or take the help of a registered investment advisor on where insurance fits into your financial plan.
By going online, both the agent and the customer should ideally be on the same page about the product being bought or sold.
The portal is just a means and not an end in itself for the customer.
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