IRDAI issues draft regulations to set up online insurance marketplace Bima Sugam

Long-awaited electronic insurance marketplace Bima Sugam set to be reality soon

The Insurance Regulatory and Development Authority of India’s (IRDAI) ambitious plan to put in place an electronic insurance marketplace – Bima Sugam - is one step closer to fruition.

The insurance regulator on February 13 issued draft regulations on the much-awaited plan to bring insurers, policyholders and intermediaries on a common digital platform. The marketplace will facilitate sale and purchase of life, health and general insurance policies as also policy servicing, claim settlement and grievance redressal. Customers will not have to pay any fee to access this platform.

“Bima Sugam - Insurance Electronic Marketplace is a robust digital public infrastructure or protocol with open standards and interoperable platforms, enabling seamless integration with various services to facilitate purchase, sale, settlement of insurance claims, grievance redressal and servicing of insurance policies and other related matters,” the IRDAI said.

To be formed under section 8 of Companies Act, 2013, it will be a not-for-profit company. “Shareholding of the company will be widely held amongst life, general and health insurers, with no single entity having controlling stake. Shareholders shall contribute to capital as and when required,” the IRDAI said.

The regulator will nominate two members on the board of company, which will appoint chairperson and chief executive officer (CEO) with prior regulatory approval and also constitute a risk management committee.

Also read: Bima Sugam a UPI moment for insurance space: IRDAI chief Debasish Panda

The insurance regulator believes Bima Sugam, which has been in the works for nearly two years, will protect the interest of policyholders and help increase insurance penetration in India by enhancing the "availability, accessibility and affordability" of insurance products and services.

IRDAI chairman has termed the proposed electronic marketplace as a potential UPI (united payments interface) moment for the insurance industry that will further the regulator’s goal of ensuring ‘Insurance for all by 2047’.

Also read: Bima Sugam may make policy buying easier, cut commissions

In June last year, IRDAI chairman Debasish Panda had sought to allay distributors’ concerns that their businesses would be impacted. He had pointed out that they, too, could use the marketplace to sell policies. “There will be no job losses, instead more jobs will be created. This will lead to efficient distribution models,” Panda said.

The IRDAI has sought feedback on the Bima Sugam proposals from all the stakeholders – policyholders, insurance companies, distributors, insurtech players and so on – by March 4, 2024.