The Insurance Regulatory and Development Authority of India (IRDAI) has given the green light for the establishment of the much-anticipated online insurance marketplace, Bima Sugam.
Regulatory Approval and Purpose
At its board meeting on March 19 in Hyderabad, the IRDAI approved the "IRDAI (Bima Sugam – Insurance Electronic Marketplace) Regulations, 2024." This move paves the way for the creation of a digital public infrastructure named Bima Sugam, aiming to universalize and democratize insurance while empowering and safeguarding policyholders' interests. The vision is to achieve "Insurance for all by 2047," according to the regulator's statement.
One-Stop Solution for Insurance Stakeholders
Bima Sugam will act as a comprehensive solution for all insurance stakeholders, including customers, insurers, intermediaries, and agents. The marketplace is expected to promote transparency, efficiency, and collaboration across the entire insurance value chain.
Impact on Insurance Penetration
The initiative comes at a time when India's overall insurance penetration has declined to 4% in FY23 from 4.2% in FY22. Bima Sugam is envisioned to deepen insurance penetration in the country and enhance the availability, accessibility, and affordability of insurance products.
Governance and Structure
According to the draft regulations issued earlier this year, Bima Sugam will be established as a not-for-profit company under Section 8 of the Companies Act, 2013. No single entity will have a controlling stake, and the shareholding of the company will be widely held amongst life, general, and health insurers. The IRDAI will appoint two members to the company's board, who will then appoint a chairperson and CEO with prior regulatory approval. They will also constitute a risk management committee.
Boost to Insurtech Industry
The development of Bima Sugam is expected to significantly boost the Indian insurtech industry and provide a substantial impetus to new-age insurance players leveraging technology.
