The internal committee formed by the Insurance Regulatory and Development Authority of India (Irdai) to review the Irdai (Regulatory Sandbox) Regulations has come out with its recommendations aimed at boosting innovation and easing compliance in the insurance sector.
It has now invited public feedback on these changes.
The amendments are grounded in the following approach:
a. Shifting from a rule-based to a principle-based framework.
b. Avoiding the inclusion of fixed values or specific numbers in the regulations.
c. Addressing operational matters within a master circular.
d. Structuring regulations to support the introduction of innovative ideas and new concepts throughout the insurance value chain.
In line with this approach, values and figures previously embedded in the regulations—such as minimum net worth, fees, eligibility criteria, application forms, experiment duration, permission extension periods, and allocated time—will now be moved to the master circular.
A few additions have also been proposed in the regulations. They are as follows.
a. Introducing a definition for “competent authority.”
b. Excluding areas related to prudential and financial stability matters—such as capital, liquidity, investment, solvency, reserving, and other areas determined by the authority over time—from the scope of the Regulatory Sandbox.
c. The objective of the regulations will be explicitly stated as: “to facilitate innovation in the insurance sector while ensuring the sector’s orderly development and safeguarding policyholders’ interests”.
d. Conditions for granting permission will include the criterion: “promotes innovation beneficial to India’s insurance sector”.
e. An inter-regulatory Sandbox proposal will be introduced, allowing “the processes and procedures for handling regulatory sandbox applications that span multiple financial sectors."
