Hyderabad:
In a bid to promote innovation in the Indian insurance industry, a panel constituted by the IRDAI has recommended that the insurance regulator should create a core Sandbox Committee having dedicated personnel to monitor and supervise the digital innovation activities, and provide support and advisory to the new set of players.
The Committee would facilitate roll out of the experiments and seek to provide the ecosystem required for the experimentation.
“Regulatory Sandbox Approach” can be used to carve out a safe and conducive space to experiment with Fin-Tech solutions, and where the consequences of failure can be contained. The objective of Regulatory Sandbox is to facilitate innovations in the insurance sector, make the insurance products more affordable and relevant for the insured and to give a fillip to insurance penetration,said the report, unveiled on Tuesday, prepared by a panel headed by Randip Singh Jagpal, chief general manager, IRDAI.
The committee proposes a consortium structure among varios players for seeksing approvals from the IRDAI..The applicants would include insurers or insurance intermediaries or any other entity other than an individual having a minimum net-worth of Rs 25 lakhs for last 3 years.
The applicant can apply in any one of more of the five categories namely insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing and any other. The applicant could apply singly or jointly in one or more than one category, provided that if the category involves insurance product or underwriting, then the applicant necessarily has to partner with an insurer.
The permission will be granted for a period of six months which can be extended for another 6 months. In no case can the proposal be allowed to go beyond 12 months.
However,if the proposal covers 5,000 persons or completes Rs. 50 lakhs of premium or any other parameter which the IRDAI specifies, the proposal will deem to have been completed.
The Regulatory Sandbox would have defined entry and eligibility criteria, boundary conditions, process flow, timelines and success factors / 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.
The purpose of the Regulatory Sandbox is to foster growth and increase the pace of the most innovative companies, in a way that provides Insurtech in particular and the Fintech sector as a whole with flexibility in dealing with regulatory requirements and at the same time focussing on policyholder protection.Strict requirements around confidentiality of policyholder’s data have been proposed.
Insurtech is used to describe the variety of emerging technologies and innovative business models that have the potential to transform the insurance business. Some of these include digital platforms (internet, smartphones), Internet of Things (IoT), Telematics, big data and data analytics, machine learning and artificial intelligence among others.