IRDAI issued the draft IRDAI (Regulatory Sandbox) Regulations, 2024 (“ Draft Regulations ”) on November 04, 2024, with the objective to foster innovation in the insurance sector while protecting policyholders, ensure orderly development and create a regulatory sandbox to temporarily relax certain rules for experimentation.
The term “Applicant” is proposed to include the insurers, insurance intermediaries, entities with a minimum net worth as specified by the Authority, or any other person designated by the Authority seeking permission to promote innovation in insurance in India, either individually or jointly and the term “Competent Authority” is proposed to mean the Chairperson, or any Whole-Time Member, committee of Whole-Time Members, or Officer(s) of the Authority, as determined by the Chairperson.
The key highlights of the Draft Regulations are as below-
- Upon implementation of the Draft Regulation, the Applicants may apply to the Authority for permission to promote or implement innovation across the insurance value chain, including areas requiring relaxation of existing IRDAI prescriptions. However, this does not apply to areas related to prudential and financial stability.
- Upon implementation of the Draft Regulation, Applicants wishing to promote or implement insurance innovation in India shall be required to submit an e- application in the specified form, along with a non-refundable fee.
- Upon meeting the eligibility criteria and legal requirements, the Competent Authority may grant permission for insurance innovation if it benefits the sector, policyholders, and industry growth.
- Upon violation of the applicable laws and the conditions specified for grant of permission under the Draft Regulations, the Competent Authority may revoke the granted permission at any time.
- Upon the end of the experimental period, the Applicant may request an extension from the Competent Authority, providing reasons and a performance analysis. The Authority shall consider the request on its merits but shall not grant an extension beyond the specified time.
- After receiving permission, the Applicant shall be required to ensure the integrity of systems, maintain confidentiality of policyholder data, and establish internal mechanisms for monitoring and evaluating controls.
- The Competent Authority shall regularly review the progress of the approved proposal through a single point of contact (SPOC) and may offer guidance or suggestions.
- Upon completion of the experimental period, the Applicant shall be required to submit a report to the Authority within 15 days, including feedback and an action plan for integrating the proposal into the regulatory framework. If the proposal meets its objectives, the Authority may allow its adoption; if not, it may be discontinued.
- Upon implementation of the Draft Regulations, the Competent Authority shall have the right to inspect or investigate any documents or records from the Applicant. If the Authority may suspend or cancel the granted permission without explanation.
The key changes in the proposed draft IRDAI (Regulatory Sandbox) Regulations, 2024 in comparison to the IRDAI (Regulatory Sandbox) Regulations, 2019 are as below-
| Sr. No. | IRDAI (Regulatory Sandbox) Regulations, 2019 | Draft IRDAI (Regulatory Sandbox) (Amendment) Regulations, 2024 |
|---|---|---|
| 1 | Clause 2(2). The objectives of these Regulations are:
| Clause 2(2). The objectives of these Regulations are:
|
| 2 | Clause 3(b). “Applicant” includes:
| Clause 3(b). “Applicant” includes:
Clause 3(d)- Definition of “Competent Authority” added:
|
| 3 | Clause 4(1). An applicant may apply to the Authority seeking permission for promoting or implementing innovation in insurance in India in categories:
| Clause 4(1). An applicant may apply for promoting or implementing innovation in insurance in India across the insurance value chain and in any area requiring relaxation of provisions of Regulations, Notification, Master Circular, Guidelines, Circular or other communication issued by Authority. Exceptions include prudential and financial condition/stability matters such as:
|
| 4 | Clause 5(2). Application shall be accompanied by a non-refundable processing fee of ₹10,000.
| Clause 5(2). Application shall be accompanied by a non-refundable fee as specified.
|
| 5 | Clause 6(1). Chairperson may grant permission after being satisfied that:
Permission valid for 6 months. | Clause 6(1). Competent Authority may grant permission if applicant meets eligibility criteria and requirements. Additional objectives:
Compliance with: Permission valid for experiment period specified. |
| 6 | Clause 7(1)(b). Chairperson may revoke permission if activities violate Insurance Act, IRDA Act and applicable laws. | Clause 7(1)(b). Competent Authority may revoke permission if activities violate Insurance Act, IRDA Act or other applicable laws. |
| 7 | Clause 8(1). Extension request after completion of 6 months with reasons and performance analysis. | Clause 8(1). Extension request after experimental period with reasons and performance analysis submitted to Competent Authority. |
| 8 | Clause 9.
| Clause 9.
|
| 10 | Clause 11(4). Applicant may file for early termination if proposal cannot meet objectives.
| Clause 11(4). Early termination request should be submitted at least one month in advance.
|
| 11 | Not Available | Clause 12.
|
| 12 | Clause 12.
| Clause 13.
|
A copy of the Exposure Draft is attached herewith for your ready reference.
Source category: IRDAI
Comments are closed