To keep up with the fast-evolving environment, Insurance Regulatory and Development Authority of India (IRDAI) has proposed the idea of a ‘regulatory sandbox’ for innovations and a safe space to experiment with the financial technology (fin-tech) and insurance solutions before they are available in the market.
A sandbox approach means to experiment, learn and evaluate before adopting a system. The insurance companies will be able to test products in a particular geography or among a few policyholders prior to launching them in the market. IRDAI has set up a committee of 10 members. The committee consists of members from IRDAI, various officials from insurance companies and World Bank members.
The chairperson of IRDAI, S.C. Khuntia stated that “In the recent past, new insurance companies and insurance intermediaries have carried out technological innovations in their products and services. The authority encourages companies to develop such new technologies to add value to customers, increase efficiency and better manage risks”.
He also stated that “Against the backdrop of a fast-evolving financial technology landscape, where fin-tech solutions are becoming common and sophisticated, a responsive and forward-looking regulatory approach will further enhance the ability of promising fin-tech innovations to develop and flourish”.
The key concerns that are going to be observed and evaluated by the panel are regulatory issues fin-tech poses across the insurance value chains. Further to that, the improvements in fin-tech and the practices followed in the other financial divisions such as the banking, etc. would also be examined.
The 10-member committee is going to procure feedback from the participants on the regulatory sandbox approach and issue a consultation paper in the next two months.
*Source:The Times of India
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