IRDAI has issued the regulation titled IRDAI (Regulatory Sandbox) Regulations, 2025 (“Regulations”) bearing reference number IRDAI/Reg/5/212/2025 dated January 01, 2025, superseding the IRDAI (Regulatory Sandbox) Regulations, 2019, with the objective to foster innovation in the insurance sector while ensuring policyholder protection and facilitate a regulatory sandbox with temporary relaxation of certain regulations during the experiment period. The key highlights of the Regulations are as under:
Key Definitions-
- For the purpose of these Regulations, the term “Applicant” includes an insurer, an intermediary or insurance intermediary, any person (other than an individual) with a minimum net worth specified by the Competent Authority, or any other person specified by the Competent Authority seeking permission, singly or jointly, for promoting innovation in insurance in India.
- For the purpose of these Regulations, the term “Competent Authority” means the Chairperson, or a Whole-Time Member, committee of Whole-Time Members, or Officer(s) of the Authority, as determined by the Chairperson.
- For the purpose of these Regulations, the term “Regulatory Sandbox” means an environment used in the financial services sector, which provides testing ground for new business models, processes and applications that may not necessarily be covered fully by or are not fully compliant with existing Regulations.
- For the purpose of these Regulations, the term “Sandbox environment” means a testing environment designed for experimentation for a specific period of time.
Procedure for seeking permission for promoting innovation in Insurance in India-
- An applicant may seek permission from the Competent Authority to promote innovation in insurance, with relaxation of regulations, excluding areas related to financial stability like capital, solvency, and liquidity.
- An applicant shall apply electronically with a non-refundable fee, meet eligibility criteria, and comply with the Competent Authority’s parameters for innovation, experimentation, and responsibilities.
- The Competent Authority may grant permission if the applicant meets eligibility criteria, promotes innovation beneficial to the insurance sector, and aligns with policyholder interests, industry growth, increased insurance penetration, efficiency, or ease of business, subject to compliance with relevant laws. The permission is valid for a specified experiment period, and the Authority’s decision is final.
- The Competent Authority may revoke the granted permission if the activities fail to meet the conditions or violate applicable laws, with the applicant being given an opportunity to be heard before revocation.
- The applicant may request an extension of the experimental period by providing reasons and a performance analysis, which the Competent Authority will consider. No further extensions beyond the specified time shall be granted.
- The applicant shall maintain system integrity, confidentiality, and internal controls, report any deviations, and bear liability for risks during the experimentation phase, with the Authority not being responsible for such liabilities.
- The Competent Authority will review the proposal’s progress regularly through the single point of contact (SPOC) and may provide guidance, but the applicant remains solely responsible for all actions and legal obligations related to the proposal.
- Upon completion of the specified period, the applicant shall submit a report to the Competent Authority within 30 days, detailing the proposal’s objectives and feedback. If the objectives are met, the proposal may be adopted under the existing regulatory framework. If not, the proposal may be discontinued. Applicants may request early termination and shall erase participant data at the end of the process. The Competent Authority’s decision on the proposal’s continuation will be final.
- The Competent Authority shall have the right to call for, inspect or investigate any document, record or communication from the applicant.
- If the applicant’s operations are deemed not in the interest of the Indian insurance market or policyholders, the Competent Authority may suspend the granted permission.
A copy of the Regulations is attached for your ready reference.
Source category: IRDAI
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