According to sources, a majority of the proposals are in the non-life segment, including some from insuretech firms. IRDA is expected to approve some of the products this financial year, according to the source.
The window for submitting applications was open for around 30 days in the months of September and October.
Regulatory Sandbox usually refers to live testing of new products in a controlled environment, wherein regulators may permit certain relaxations for the limited purpose of testing. It is similar to a pilot project and the insurer is free to withdraw the project in case it fails to succeed, provided it doesn’t impact the customers who have already purchased it.
To evaluate such applications, IRDA has formed an eight-member panel headed by International Institute of Information Technology (Bangalore) Director S Sadagopan.
In May this year, the insurance regulator had come out with draft regulations for the creation of a regulatory sandbox in the insurance sector. IRDA stipulated that an applicant should have a net worth of Rs 10 lakh to file products under the regulatory sandbox.
According to a senior official in a public sector general insurance firm, the sandbox method will lead to much needed innovation in the insurance sector with products like insurance against loss of employment, savings-linked insurances, and better micro insurance products.
The draft regulations said the categories in which innovation can be promoted include insurance solicitation & distribution, insurance products, underwriting, policy and claims servicing.
The regulations also provide for relaxation of one or more provisions of any regulations to the applicant, subject to conditions. The maximum period for which the relaxation can be granted is one year.
The draft guidelines also said, “If the Authority is satisfied that the objectives of the proposal has been met, it may accord permission to the applicant to adopt the proposal under regular regulatory supervision wherein in addition to provisions of Insurance Act, 1938, IRDA Act, 1999 all regulations, guidelines, circulars, etc will be applicable from the date of moving to regular regulatory supervision.”
Notably, FCA (Financial Conduct Authority), the British financial regulator was the first to launch the Fintech sandbox, back in 2016. The move was seen as a big success, and a number of fintech firms rolled out the products in a bigger way. Taking a leaf from the UK, different regulators like Sebi (Securities and Exchange Board of India) and IRDA have been taking steps to promote sandbox method for innovation in the financial sector.