InsureTech start-ups would be gainers with the proposed amendments in Insurance Regulatory and Development Authority of India (IRDAI) Regulatory Sandbox coming into place.
The IRDAI has suggested increasing the experimental period of the regulatory sandbox from the existing six months to up to 36 months. The regulatory sandbox allows the regulator, innovators, financial service providers and customers to conduct field tests to collect evidence on the benefits and risks of new financial products.
“IRDAI is open to allow the regulations, which may benefit the citizens’ heath. We have already initiated amendment of regulations in sandbox that would help in innovation and experimentation. This would also give an impetus to start ups that are coming up with innovative solution. Going forward, parametric insurance products need to come up, OPD services need to be covered, treatments currently under exclusion should be included and distribution inefficiencies need to be addressed,” said Debashish Panda, Chairman, Insurance Regulatory and Development Authority of India while speaking at the Confederation of Indian Industry (CII) 16th Health Insurance Summit 2022.
The Insurance regulator IRDAI had notified the IRDAI (Regulatory Sandbox) Regulations, 2019 with a validity of two years to facilitate innovation in products or solutions proposed to be offered by the insurance companies and other players for the benefit of policyholders. Subsequently, the Authority has extended the validity period of the said Regulations for a further period of two years up to 25th July, 2023.
“There is a need to work around optimizing cost and the need for a comprehensive health insurance coverage for end to end healthcare services and include pre-existing illnesses. Health Insurance needs to work closely with healthcare providers and there is a need to brainstorm new and comprehensive products for geriatrics care, and pre-existing diseases. Another major challenge that needs to be addressed is the pricing of products that makes it unaffordable for many parts of the society,” said Panda.
The health insurance market has grown at a CAGR of 19% in the last 5 years, however, given its potential it needs to grow at a CAGR of 30-35% CAGR. The authority has already received the stakeholders' comments on Exposure Draft IRDAI (Regulatory Sandbox) (Amendment) Regulations, 2022.
“Health insurance also needs adequate infrastructure and healthcare providers and health insurance providers need to work together and investors also need to invest on both. Currently availability of infrastructure is restricted to metros and tier 1 and 2 cities,” said Panda adding that there is a need to think for a system, where pick from home to drop to home care along with feedback could be provided,” said Panda.
There has been a new wave of start-ups in the insurance sector, especially after the covid-19 pandemic. Many of these startups are focusing on enabling insurers to leverage data and analytics. From quote issuance to claim settlement, they act as a digital intermediary between a customer and an insurance company.
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