April 9, 2020
As India’s insurance sector is expected to reach a market size of $280 billion by 2020, a tremendous InsurTech opportunity is waiting to be realized. With a conducive regulatory environment, with the entry of new FinTech and InsurTech players with innovative business models, and with the incumbents embracing technology to develop a unique set of differentiated offerings, India’s InsurTech sector is definitely on a course of transformation in both life and non-life insurance space.
To offer background: the Insurance Regulatory and Development Authority of India (IRDAI) notified a regulation last year (2019) to facilitate the creation of a regulatory sandbox environment. The move is aimed at three aspects: 1. developing the insurance sector with innovation as the driving force; 2. protecting the interests of the policyholders; 3. fostering the growth of innovative companies.
The IRDAI’s regulatory sandbox gives innovative companies a conducive environment to test their new business models, processes, and applications that are not permitted under the existing regulatory framework. The initiative allows the selected companies to test their proposals on a live audience under the supervision of the insurance regulator.
The regulatory body has already completed the first batch in which 33 proposals across three areas a. health, b. non-life, and c. distribution development was approved for testing. These 33 products developed by the insurers have also been launched as pilots. The period for launch and completion to try out the specific products is from February 1, 2020, to July 31, 2020.
The IRDAI has also completed the second batch of the sandbox and has approved a total of 16 products (nine non-life and seven life insurance). The period for launch and completion to try out the specific products is from May 1 to October 31, 2020.