In the past few decades, the Insurance Industry has regulated more than almost any other industry.
In addition to this, the incorporation of the Insurtech movement has brought along innovation from upcoming technologies which were not a major part of the Insurance Industry earlier. It’s indeed an exciting time for all, but this comes at its own set of risks.
One of the ways insurers are trying to overcome this risks is through the regulatory sandbox, a concept which is fresh yet highly prominent in other ways.
The concept of a regulatory sandbox makes it more possible for the regulator and Insurtech startup or technology firm (and in some cases the incumbent) to work on an initiative in an enclosed environment before the product or service hits the masses.
For an industry like Insurance which is highly regulated, the Regulatory Sandbox seems like a good idea.
But a sandbox can only hold many businesses within it. Furthermore, it’s not the only way to drive an innovation initiative to get regulators happy.
Talking about the First Launch
The insurance regulator allowed the launch of the first insurance plan under a sandbox approach. This policy lets the insurers launch eccentric products on a pilot basis before seeking its approval.
In India, the IndiaFirst Life Insurance Company Ltd. was the first company to launch this plan on 12thApril 2017 and the plan got the approval of Insurance Regulatory and Development Authorityfor a launch on 27th November. The micro-insurance plan by IndiaFirst aimed at those with seasonal incomes, working in the unorganized sector or belonging to underserved sections. Also called as“Insurance Khata”, it lets buyers pool multiple single-insurance plans in one account and let them paysingle premiums as and when feasible.
Countries that have adopted Regulatory Sandbox Approach
Presently, the Sandbox approach is into implementation in most global region’s financial hubs including Abu Dhabi, Australia, Canada, Hong Kong, Malaysia, Singapore, Switzerland and the UK. A notable component is the growing number of countries that have proposed Sandbox type legislation to ensure they remain competitive with those already on board. These include countries such as Indonesia, Israel, Russia, Taiwan and the USA. The list keeps on changing so fast there may well be more countries in either group.
The current state of the Insurance industry is an exciting time to be in. There are all types of distinct new technologies and modernizations stepping into the value chain to enhance and disrupt the way businesses used to process earlier.
“Regulation” is the key to the insurance industry. The main reason behind this is that the insurance industry provides a clear purpose and protection to the society that other business might probably not provide at such intensity.
The insurers must be in such a state that gives their customer the complete protection and peace of mind that they assure through the innovative and enhanced efforts, and with the utility of advanced technologies.
Attributed to Mr.Rakesh Goyal, Director, Probus Insurance Broker Limited