IRDAI said that while initial permission will be granted for six months, it can be extended by another six months.
The insurance regulator will allow testing of relevant products and services for six months before they are commercially launched in the market. As part of the regulatory sandbox initiative, Insurance Regulatory and Development Authority of India (IRDAI) has said that there would be defined entry and eligibility criteria.
IRDAI said that companies planning to test products will have to form a consortium and apply. The applicants would include insurers or insurance intermediaries or any other entity other than an individual having a minimum net-worth of Rs 25 lakh for the last three years.
"This will encourage insurance-technology innovations that help increase insurance penetration as well as seek to benefit policyholders at large," said the regulator.
Insurtech is used to describe the variety of emerging technologies and innovative business models that have the potential to transform the insurance business. Some of these include digital platforms (internet, smartphones), Internet of Things (IoT), Telematics, big data and data analytics, machine learning and artificial intelligence among others.
The applicant can apply in any one of more of the five categories namely insurance solicitation or distribution, insurance products, underwriting, policy & claims servicing and any other. The applicant could apply singly or jointly in one or more than one category, provided that if the category involves insurance product or underwriting, then the applicant necessarily has to partner with an insurer.
IRDAI said that while the initial permission will be granted for six months, this can be extended by another six months. After this, the regulator will look into this proposal and decide whether this can be continued in the market or discontinued. Further, all the participants will have to delete the customer data that they had collected for the testing purposes.
In September 2018, IRDAI had set up a committee to look into the concept of a regulatory sandbox in the country.
At present, about 780 life insurance and over 1,000 general insurance products are being sold in the market for individuals and groups.This method is expected to help companies have a better success rate with their products. According to industry estimates, for every 10 new products that are filed, two fail to make the mark at present.