Bringing in a big reform, insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has announced the launching of Bima Sugam – a platform that would bring all the stakeholders of life, general and health insurance on a single platform. Bima Sugam is scheduled to become active from January 1, 2023.
Role of Bima Sugam
The prime motive of launching Bima Sugam is to provide a one stop solution to all insurance related issues and to provide a centralised platform to ensure that the insured persons don’t need to visit so called home branches to avail insurance related services.
“The vision for Bima Sugam, from what we know, is fairly complete, and having the entire policy lifecycle managed from a centralised technology infrastructure is going to be a game changer for the industry. It will ease distribution and drive greater trust in insurance, and also drive greater value for customers,” said Avinash Ramachandran – COO, Assurekit.
“However, unlike mutual funds and payments, insurance has more complex products and lacks standardisation in the underlying technology. Additionally, there is a lack of understanding of insurance amongst the Indian consumer base, which makes disintermediation a challenge. If the challenges around execution can be overcome, the platform can be a landmark change in the industry, not just in India but worldwide,” he added.
Demat accounts needed or not
As the insurance policies would be digitised to ensure seamless access for smooth services, there are however apprehensions among the existing policyholders and service providers on the need of Demat accounts to avail the services.
“No, Demat accounts are not needed. Policyholders will have to give consent (through Aadhaar verification) to access policies, but will not have to create Demat accounts like they do for trading and investing,” said Ramachandran.
How would the policies be digitised without Demat?
“Insurance repositories already exist and are going to use KYC information of policyholders to aggregate all policies purchased by an individual. Insurers just need to do KYC for every policy that they sell now. Currently they are only doing this for certain policy types,” said Ramachandran.