Insurance Regulatory and Development Authority of India (Irdai) is mulling to extend testing of products under the regulatory sandbox mechanism to up to three years.
The Irdai Chairman said all these initiatives will help in furthering the goal of insurance penetration and reaching out to more and more people.
A sandbox is an environment used in the financial services sector, which provides testing ground for new business models, processes and applications that may not necessarily be covered fully by or are not fully compliant with existing regulations.
"The insurtech ecosystem is raring to grow. At Irdai we have already developed something called the regulatory sandbox mechanism where the proof of a concept is actually being allowed to be tested on the ground. We are informed that the regulatory sandbox has some shortcomings," Debasish Panda, Chairperson, Irdai said during a talk session.
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As of now, the applicants under the regulatory sandbox mechanism can apply through cohorts.
"Here we now realise that this has to be a continuous process, the period for which they are allowed to test such products in the market is only limited to six months. We are now proposing to expand that period to even up to three years, particularly for life insurance products," Panda said.
"Work is in progress and the insurtech players are raring to grow, they are all enthused, so technology is also coming in. Here we have to build-up our capacity to regulate them in a manner as far as the market product is concerned," he said.
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He made the comments during a talk series on 'Know Your Regulator' hosted by The State Capacity Initiative at the Centre for Policy Research (CPR), the Forum of Indian Regulators (FOIR) and the Indian Institute of Corporate Affairs (IICA).
Panda noted that Irdai is looking at the possibility of allowing even smaller players into the insurance sector.
"Look at the banking system, we have differentiated players, that's how the penetration of banking has happened in this country with more than 130 crore accounts in play today. So we are trying to think also of micro insurance players.
"We are thinking of allowing niche players also to come into this segment. We are also talking of regional entities to come into this, although it will entail some element of amendment in the (Insurance) Act to allow the lesser capital also so that these players can come," he said.
Panda further noted that these niche players will have to have the technology backbone and insurtech is there to help them cater to those areas which are still unserved in the country.
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