Insurance marketplace Bima Sugam's capital requirement to rise to Rs 500 cr

Digital platform will allow consumers to compare, purchase and manage life, health, general insurance products

The capital requirement for the insurance regulator’s Bima Sugam, an online marketplace to buy, service and sell insurance products, has increased to Rs 500 crore from the previously envisaged Rs 100-200 crore, said multiple sources.

 

During a two-day Bima Manthan conference held in Hyderabad earlier this month, insurance companies were informed about an increase in the capital requirement in four to five years. Of this amount, companies have to provide Rs 330 crore immediately and the remaining after two years.

 

Bima Sugam India Federation (Bima Sugam), the non-profit backed by the Insurance Regulatory and Development Authority of India (Irdai), will house the online marketplace aimed at democratising insurance, potentially becoming the first of its kind globally.

 

Consumers will compare, purchase and manage life, health, and general insurance products at the single-window platform. It is a part of the Bima Trinity that includes Bima Vistaar and Bima Vahaak.

 

All insurance companies will have equal shareholding in Bima Sugam for which E&Y has been roped in as a consultant.

 

“Ernst & Young (EY) has prepared a business plan which is approved by the board of directors of Bima Sugam and as per that business plan, the company would require Rs 500 crore of capital over a period of next three to four years. Out of which Bima Sugam intends to bring in Rs 330 crore of capital immediately, which will be for two years, and the remaining Rs 170 crore would be raised after two years,” said an industry official aware of the development. 

 

Another official said: “All companies with shareholding in Bima Sugam will have to pay Rs 330 crore with Rs 165 crore each from life and general insurance players. It is required for technology enablement and Bima Sugam is also looking for office space in Mumbai.”

 

"We have taken board approval to provide around Rs 6.5 crore to the platform being envisaged by the regulator," said the chief executive of a life insurance company, adding discussions on capital requirement were held during Bima Manthan.

 

On November 1, Prasun Sikdar took charge as the first managing director and chief executive officer of Bima Sugam for three years.

 

Two additional officials are also in the process of being appointed. ExecutiveAccess has been hired as the human resources consultant for the recruitments.

 

Bima Sugam is being touted as a game changer in the insurance sector as it will allow sale of more products and enhance insurance penetration in the country. The payment for these products will happen through the Unified Payments Interface, with underwriting by the respective insurance companies immediately to generate policies. Post which, the policy is sent to the customer in a digitised format. 

 

Irdai has not given a specific time frame as to when this platform will go live, but industry insiders believe BimaSugam will get launched in the first half of next financial year (FY26).

 

In October, Irdai chairman Debasish Panda said that the implementation of the Bima Sugam is at advanced stages.

 

“The appointment of other key management personnel (for Bima Sugam) is also at an advanced stage of getting completed and soon we should have the entire leadership team in place. We are also in the process of onboarding the system integrator –the technology service provider – and hopefully we would see the first phase of Bima Sugam’s launch soon,” said Panda.