For the sandbox, an applicant should have a net worth of Rs 10 lakh and a proven financial record of at least one year.
The Insurance Regulatory and Development Authority of India (Irdai) announced guidelines on operational issues pertaining to regulatory sandbox. This move will allow insurance companies to test products in particular geography or among set of few policyholders before they are available in the market. Market participants say that, going forward, there might be new products launched specially for the retail segments.
The guidelines show that every applicant shall demonstrate to the Irdai that the proposal for innovation will help increase insurance penetration or provide enhanced services to the policyholders. The proposal shall not be made merely for the sake of seeking a regulatory relaxation but shall be a genuine innovation. “It gives a wonderful opportunity not only to insurance companies but to the insurance intermediaries to come and experiment as to what that innovative idea is, where you can bring in the efficiency and innovation to test out whether it is going to be an idea which is going to bear fruits and it could result into something which is negative,” said Randip Singh, chief general manager and head-intermediaries at Irdai. He was talking at CII Insurance and Pensions Summit on Friday.
Insurance regulator in its guidelines said that an application for innovation in insurance involving underwriting or product category or both shall be filed by any applicant in association with any insurer. An application involving an activity other than underwriting or product category may be filed individually or jointly by any applicant. “Expenses incurred on the proposal shall be maintained separately and shown as a line item in the annual report. In case of insurers, such expenses shall be charged to the shareholders’ accounts or its equivalent,” said Irdai in its guidelines.
“The best part of the whole process is that you are able to experiment, you can approve or disapprove a certain hypothesis. It is a learning for the regulator as well. If there are certain challenges or difficulties as far as regulation is concerned, it forces us to think whether the regulation needs to be modified,” added Singh.
For the sandbox, an applicant should have a net worth of Rs 10 lakh and a proven financial record of at least one year. Officials in the insurance industry say that this announcement would give some relief to several insurers as many times regulator takes months to clear the new products. With the sandbox technology, we can launch the testing product whenever we need it.