Additional Powers and Rights
Inspection and Intervention: The Authority can inspect documents and operations and take necessary actions if the applicant’s operations are deemed not in the interest of the market or policyholders.
“Insurance Regulatory and Development Authority of India (Regulatory Sandbox) Regulations, 2019” sets the framework for promoting innovation in the insurance sector through a regulatory sandbox. Here’s a detailed summary of these regulations:
General Provisions
Title and Commencement: These regulations are known as the IRDAI (Regulatory Sandbox) Regulations, 2019, and came into effect upon their publication in the Official Gazette.
Duration: These regulations are in force for a period of 2 years from the date of publication in the Official Gazette.
Objectives
Innovation and Development: To balance the orderly development of the insurance sector while protecting policyholder interests and facilitating innovation.
Regulatory Flexibility: To create a regulatory sandbox environment that allows temporary relaxation of specific regulatory requirements to foster innovation in insurance.
Definitions
Terms such as “Act,” “Applicant,” “Authority,” “Regulations,” “Regulatory Sandbox,” and “Sandbox environment” are defined to clarify their meanings within the context of the regulations.
Procedure for Promoting Innovation
Categories of Application: Applicants can seek permission to innovate in categories like insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing, and any other category recognized by the Authority.
Application Process: Applications must be submitted electronically along with a non-refundable processing fee. The Authority uses a cohort approach to review applications.
Grant of Permission
Conditions for Grant: The Chairperson of the Authority may grant permission if the proposal promotes beneficial innovation, is in policyholders’ interests, contributes to the industry’s orderly growth, increases insurance penetration, and meets other specified requirements.
Duration and Validity: Permission is initially valid for 6 months, with the possibility of extension based on performance analysis and satisfactory reasons provided by the applicant.
Monitoring and Evaluation
Internal Monitoring: After permission is granted, the applicant must ensure system integrity, data confidentiality, and has adequate mechanisms to review and monitor their controls and systems.
Authority Review: The Authority, through a designated point of contact, regularly reviews the progress and may guide the applicant as necessary.
Conclusion and Reporting
Final Reporting: At the end of the sandbox period, the applicant must report on the project’s outcomes and propose how to integrate the innovation within the regular regulatory framework.
Evaluation: If the Authority deems the objectives met, it may allow the continuation of the proposal under standard regulations. Otherwise, it may direct discontinuation.
Regulatory Flexibility
Authority’s Powers: The Chairperson may grant relaxations from specific regulations for up to one year, provided these do not affect compliance with core statutory requirements.
These regulations facilitate controlled experimentation in the insurance sector, allowing innovations that might not fully comply with existing regulations to be tested and potentially integrated into the broader regulatory framework after successful trials.
