Why Bima Sugam could be the UPI moment for the insurance sector

The Insurance Regulatory and Development Authority of India (Irdai) has issued an exposure draft for Bima Sugam, an insurance electronic marketplace. Akin to the United Payment Interface (UPI) model, this platform is expected to revolutionise the way insurance is purchased and serviced in India by bringing buyers, insurers, and intermediaries together on a single digital platform. Through the portal, you will be able to buy the policy directly from the insurer. On the other hand, intermediaries will also be able to integrate with all insurance companies to sell policies online. It will also help in claim settlement.

The proposed framework for Bima Sugam underlines its purpose. A not-for-profit firm under Section 8 of the Companies Act, 2013, will run it. The company will provide services to insurance stakeholders, with its shareholding spread across life, general, and health insurers to prevent any single entity from having a controlling stake. The capital-sharing arrangement is not revealed yet, but the draft states that shareholders shall contribute to the capital as and when required. It will employ a consent-based application for the services without charging the consumers for availing the services. The IRDAI's board will have two nominated members. The board will form a Risk Management Committee to mitigate risks, and the IRDAI will give the final approval for the Company's Chairperson & CEO appointments.

However, the platform's launch, initially slated for January 2023, has experienced delays and is now rescheduled for June 2024 due to complexities involving stakeholders and technical challenges.

"The availability of a centralised database in future will mean that InsurTech firms can leverage rich, standardised data to develop tailored solutions that will meet the evolving needs of consumers across various demographics. Moreover, the standard API integration will expose InsurTech players to multiple products from all categories, facilitating seamless interaction and interoperability. This interconnectedness will also enhance efficiency and become a source of creativity, allowing InsurTech firms to create holistic solutions that transcend traditional boundaries. As we embrace the potential of Bima Sugam, we also recognise the immense responsibility and opportunity it will bring to the table. By harnessing the power of technology, collaboration, and innovation, we will be able to propel the insurance industry towards greater accessibility, transparency, and customer-centricity in future," said  Mayank Gupta, COO & Co-founder, Zopper.

The technology will be integral to Bima Sugam, but its complexity brings possible risk factors such as data breaches and technical glitches that could have severe impacts. S K Sethi, founder & CEO of the Insurance Foundation of India, highlights the importance of addressing data privacy and cybersecurity in implementing Bima Sugam. The platform, he says, is critical to support the aspirations of India's fast-growing economy, projected to be the world's third-largest.

Also read: Are there health insurance plans covering maternity and IVF treatment expenses for newlyweds planning to start a family?

Also read: Gold and silver prices today: Yellow metal falls below key $2,000 level, Silver plunge more than 2%

Also read: After France, UPI services now in Sri Lanka and Mauritius: Here's how NRIs can make payments sitting abroad

Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance stated, “The draft regulations for Bima Sugam is a big step towards bringing this transformative initiative to fruition. The regulations focus on making insurance easy to access and affordable for everyone. It’s towards streamlining the entire insurance value chain, from policy issuance to claim settlement, thereby promoting transparency and collaboration at every stage. These initiatives will play a huge role in driving penetration of insurance and enabling us achieve the vision of Insurance For All by 2047. The guidelines will enable the industry to also build collaborative eco-systems for the benefit of customers. It’s an encouraging move and a welcomed one for Indians, as they can get better access to life insurance products designed for their long-term life goals.”

Achieving an efficient platform necessitates considering user experience and market readiness. The IRDAI, entrusted with the policyholder's interests, is tasked with aligning stakeholders and developing a robust platform while addressing contrary views. Through careful time investment and planning, Bima Sugam promises to be a milestone in India's insurance sector, making insurance acquisition and management a seamless experience