IRDAI to expand distribution framework, eyes embedded insurance boom

Embedded insurance framework to be rolled out soon

The Insurance Regulatory and Development Authority of India (IRDAI) is working on a new framework to help insurers diversify their distribution channels through embedded insurance, according to Mayank Bathwal, CEO of Aditya Birla Health Insurance (ABHI).

Embedded insurance is a type of insurance integrated into the purchase of a product or service, making it convenient for consumers to get coverage without a separate application process. It is often offered at the point of sale, either online or offline, and is typically low-cost and easily accessible. For example, E-commerce, ride-hailing services, and wearables.

"The regulator is working on it, and the next set of frameworks it is looking at will focus on expanding the distribution system as much as possible," he said.

"We need more people taking insurance to the masses and making it more accessible," added Bathwal.

Companies such as Ola, MakeMyTrip, Amazon and Noise have already incorporated insurance products into their platforms.

IRDAI has consistently maintained that life insurers should not be overly dependent on their parent banks for distribution. Instead, the regulator encourages insurers to build partnerships with multiple banks to foster competition and minimize reliance on a single institution.
Beyond bancassurance, IRDAI is also pushing for life insurers to adopt a broader range of distribution channels.

With IRDAI now allowing greater product innovation, including flexibility in policy tenure, the insurance industry has the opportunity to introduce more consumer-centric solutions, Bathwal said.

Alok Rungta, CEO and Managing Director of Future Generali, echoed this sentiment, emphasising that embedded insurance will revolutionise the industry.

“If you’re buying from Amazon, you have instant access to insurance. Embedded insurance is going to become very big in the times to come,” he said. It is crucial for IRDAI to implement this framework at the earliest, as it will significantly reduce the industry's current challenges, said Rungta.

"It could bring all the complaints down to near zero," he added.