In a major boost to innovation in insurance, the insurance regulator will review innovative and experimental product filings every month and approve them without delay. This is part of the reforms the regulator has brought in norms pertaining to Regulatory Sandbox, which were originally introduced by the IRDAI in 2019.
Regulatory sandbox refers to live testing of new, innovative products in a controlled regulatory environment, backed by relaxation of certain norms by the IRDAI for the limited purpose of testing. The objective behind this approach is to identify innovative ideas to foster growth in the insurance sector.
However, till recently, the process was not perpetual and based on a notification by the regulatory for a specific period of time followed by review. But now, the process has been made perpetual, as the norms have been amended to allow insurers/intermediaries to experiment on an ongoing basis by increasing the experimentation period from six months to up to 36 months, and moving from the existing batch-wise (cohort approach) clearances/approvals to clearances/approvals on a continuous basis. A provision for review of rejected applications has also been introduced.
A special committee formed by the IRDAI with experts in digital banking of SBI, RBI and industry which will be chaired by a member of IRDAI. The committee would meet in a hybrid mode at least once in a month or as may be required to look into applications and related matters as per a notification.
Given the fact that the first cohort of the regulatory sandbox in pre-covid times got a massive response of over 125 products when it was introduced, the present move by IRDAI to have a perpetual and regular mechanism is expected to encourage and speed up innovation, according to a senior official of IRDAI.
Some insurance products in motor insurance like pay as you drive have been designed under regulatory sandbox framework so far.