As of now, applicants under the regulatory sandbox mechanism can apply through cohorts.
The Insurance Regulatory and Development Authority of India Irdai is considering extending testing of products under the mechanism for up to three years.
The 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 that 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 isn't growing as fast as it can be. We have developed a mechanism that allows the proof of a concept to be tested on the ground. Chairperson Debasish Panda said during a talk session that the chairperson of the conference said that the organization has some shortcomings.
The applicants can apply through cohorts under the regulatory sandbox mechanism.
The period for which they are allowed to test such products in the market is only limited to six months, so we now realise that this has to be a continuous process. "We are proposing to extend that period to even up to three years, particularly for life insurance products," Panda said.
Technology is also coming in, as the work is in progress and the insurtech players are raring to grow. He said that we have to increase our capacity to regulate them in a manner that is as far as the market product is concerned.
He made 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. He said that Irdai is looking at the possibility of allowing even smaller players into the insurance sector.
In the banking system, we have differentiated players, that's how the penetration of banking happened in this country with more than 130 crore accounts in play today. We are trying to think of micro insurance players.
We are thinking of allowing niche players to come into this segment. He said regional entities could come into this, but it will involve an amendment to the Insurance Act to allow the lesser capital so that these players can come.
Panda said that these niche players will have to have the technology backbone and insurtech to cater to those areas that are still unadventured in the country.