IRDAI approves 8 principle-based regulations

What’s in today’s article?

• Why in news?
• What is Insurance Regulatory and Development Authority of India (IRDAI)?
• What is Bima Sugam?
• Other approvals made by IRDAI

Why in news?

The Insurance Regulatory and Development Authority of India (IRDAI) has approved eight principle-based regulations including the much-awaited Bima Sugam marketplace.

Insurance Regulatory and Development Authority of India (IRDAI)

• IRDAI is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999.
• IRDAI's duties include:
  • Regulating the insurance business
  • Promoting the orderly growth of the insurance business
  • Protecting the interests of policyholders

Bima Sugam

• About
  • It is an online platform where customers can choose a suitable scheme from multiple options given by various companies.
  • All insurance requirements, including those for life, health, and general insurance (including motor and travel) will be met by Bima Sugam.
  • This platform will help in the settlement of claims, whether it is health coverage or death claims, in a paperless manner on the basis of policy numbers.
• Benefits of Bima Sugam
  • Single window for the policyholder to manage his/her insurance coverage.
    • It will provide end-to-end solutions for customers’ insurance needs i.e., purchase, service, and settlement in a seamless manner.
  • Empowerment of consumers
    • Currently, there are hundreds of insurance schemes in the life and non-life sectors.
    • Customers have no idea who is offering the best deal and the pros and cons of different schemes.
    • Bima Sugam will enable them to identify a suitable scheme for the customers in a single platform.
  • Benefits for insurance companies and intermediaries
    • It will facilitate insurance companies to access the validated and authentic data from various touch points on a real-time basis.
    • The platform will provide interface for the intermediaries and agents to sell policies and provide services to policyholders, among others, and reduce paperwork.
  • Universalise and democratise insurance
    • IRDAI says Bima Sugam is an electronic marketplace protocol.
    • This protocol will be connected with India Stack which is a set of APIs (application programming interface) that allows governments, businesses, startups, etc. to utilise the unique digital infrastructure to enable seamless delivery of services.

Approvals made by IRDAI

• The IRDAI (Bima Sugam – Insurance Electronic Marketplace) Regulations, 2024
  • It aims to establish a digital public infrastructure named Bima Sugam.
  • It will empower and safeguard policyholders’ interests and achieve the vision of Insurance for all by 2047.
• The IRDAI (Corporate Governance for Insurers) Regulations, 2024
  • It aims to establish a robust governance framework for insurers, defining the roles and responsibilities of the board and management.
  • This is for the first time that the governance aspects under the existing guidelines are notified in the form of regulations.
• IRDAI (Insurance Products) Regulations, 2024
  • It merges six regulations into a unified framework.
  • It is aimed at enabling insurers to swiftly respond to evolving market demands, enhancing the ease of conducting business and boosting insurance penetration.
• IRDAI (Registration and Operations of Foreign Reinsurers Branches & Lloyd’s India) Regulations, 2024
  • It consolidates two regulations and aims to foster the systematic development of the reinsurance sector in India by promoting orderly growth and harmonizing the existing legal and regulatory framework.
• Other decisions
  • IRDAI cleared the regulatory changes under rural, social sector and motor Third-Party (TP) motor insurance.
  • For rural obligations, the unit of measurement will now be the gram panchayat.
  • The scope of the social sector has been extended to cover cardholders and beneficiaries under various schemes.
  • Under Motor TP, the unit of measurement will be the renewal of coverage for goods and passenger-carrying vehicles, as well as tractors.

Q1) What is Third-party (TP) motor insurance?

Third-party (TP) motor insurance, also known as act-only insurance, is a type of liability insurance that protects the owner of a vehicle from claims made by a third party. It's a statutory requirement for all vehicle owners under the Motor Vehicle Act.

Q2) What is corporate governance?

Corporate governance is a set of rules, practices, and processes that direct and control a company. It's the framework of policies and guidelines that inform a company's conduct, decision-making, and practice.