IRDAI proposes extension of regulatory sandbox guidelines by 2 years

Insurance regulator IRDAI on Tuesday proposed to extend the validity of regulatory sandbox guidelines by two years as the proposals received under it require more time for completion.

To give a fillip to insurance penetration and facilitate innovations in the sector, especially those triggered by technology, the regulator had notified the IRDAI (Regulatory Sandbox) Regulations, 2019 on July 26, 2019.

The regulations are scheduled to expire on July 25, 2021.

The Insurance Regulatory and Development Authority (IRDAI) invited applications for the first cohort of the regulatory sandbox from September 15, 2019 till October 14, 2019. A total of 173 applications were filed with it.

It announced the second cohort for one month starting from September 15, 2020 and received 185 applications.

In an exposure draft, the regulator said it was observed that most of the proposals could not be completed within a period of six months due to COVID-19. They were, therefore, granted extension by another six months to complete the experiment.

"It may also be noted that the validity of the Regulatory Sandbox Regulations, expires on July 25, 2021. Some of the proposals belonging to the 1st cohort will not be completed by then.

"In addition, the proposals of 2nd cohort will not be completed by July 25, 2021," IRDAI said while recommending that the period of validity of the IRDAI (Regulatory Sandbox) Regulations be extended by two years.

Comments have been invited on the draft regulations by January 27.

Regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of the testing.

The RS allows the regulator, innovators, financial service providers and customers to conduct field tests to collect evidence on the benefits and risks of new financial products and services.