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IRDAI Guidelines on Operational Issues pertaining to the Regulatory Sandbox

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  • IRDAI Guidelines on Operational Issues pertaining to the Regulatory Sandbox

IRDAI vide Ref No. IRDAI/I&AT/GDL/MISC/77/3/2023 dated March 31, 2023, has issued Guidelines on Operational Issues pertaining to the Regulatory Sandbox

The procedure for filing the application: –

  • Application for grant of permission for promoting innovation in insurance in India:
  • Applicant shall make an application to IRDAI in “Form-RG-1” in any one or more of the categories under the IRDAI (Regulatory Sandbox) Regulations, 2019 (Regulation)
  • Requirement of the Application:
  • Applicant shall demonstrate that the proposal for innovation will help increase insurance penetration or provide enhanced services to the policyholders. Whether the proposal is innovative or not shall be decided by the Chairman and his decision will be final.
  • The proposal shall not be made merely for the sake of seeking a regulatory relaxation but shall be a genuine innovation.
  • Single Point of Contact (SPOC)
  • The applicant shall nominate an experienced and responsible person to be SPOC for interreacting with IRDAI on application submitted. IRDAI shall also nominate a SPOC for interaction/co-ordination with the applicant.
  • All communication shall be routed through these SPOC.
  • Regulatory Relaxation
  • IRDAI may consider granting limited regulatory relaxation to the proposals that promotes innovation in insurance in India.
  • No application shall be made where the proposal does not require any regulatory relaxations.
  • No relaxation shall be allowed in respect of compliance with Insurance Act, 1938 or the IRDAI Act, 1999 or any other applicable statutory provisions.
  • Disclosures to the customers/participants of the proposal by the applicant
  • They shall be clearly informed that they are participating in a proposal whose outcomes are not certain.
  • Prior written consent shall be taken regarding their willingness to participate in the proposal.
  • Applicant to ensure that the participating customers have made a voluntary & conscious choice.
  • A detailed exit strategy shall furnished to the prospects.
  • Criteria for end/closer of the Proposal
  • The proposal shall come to an end if any of the following is achieved within the stipulated time:
  • Number of customers- up to 1 lakh
  • Premium collected-Rs. Up to 5 Crore
  • Any other parameter(s) decided by the Authority.
  • Application for innovation in defined categories:
  • Any application for innovation shall be filed by an applicant in association with an insurer.
  • The application shall specify in clear terms the regulatory provisions that needs relaxation.
  • The potential risks that are inherent to the proposal and the measures taken to mitigate the risks shall be communicated.
  • The applicant who is the insurer shall apprise their Board; and put in place process for closely monitoring the implementation of the proposal.
  • Application made to IRDAI shall follow the process as mentioned below:
  • An application in Form-RG-1 which is not complete are liable to be rejected.
  • IRDAI may advise the applicant for a personal presentation, if required.
  • IRDAI shall inform the applicant regarding the acceptance/non-acceptance within 45 days from the date of receipt of the application or additional information/documents.
  • If the application is not accepted, the applicant may file a review application with IRDAI within 15 days from the date of receipt of such communication.
  • Accounting Treatment of expenses on the proposal for innovation
  • Expenses incurred on the proposal shall be maintained separately and shown as line item in the Annual Report. In case of insurer such expenses shall be charged to the shareholder’s account.
  • Migration of policies and services at the end of experiment period
  • The experiment will cease to exist post completion of the experiment period and the applicant shall not continue to offer the service or the product in the market, if necessary, amendments to the regulations/guidelines/circulars are not in place.
  • The applicant shall provide choice to the policyholders to migrate to other product at the end of the experiment period or if the policyholders does not continue with the service or product, the insurer shall honor the existing liabilities incurred during the experiment period.
  • Other issues
  • The applicant shall immediately report to IRDAI on any regulatory action taken against the proposal by the Government or any regulatory authorities.
  • Reporting Requirements
  • The applicant shall submit the reports as specified by IRDAI while approving the proposal.

Source category: IRDAI

Attachments

  • /2023/180_Guidelines_on_Operational_Issues_pertaining_to_the_Regulatory_Sandbox_(1).pdf

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