IRDAI issues exposure draft on Bima Sugam e-marketplace for insurance

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IRDAI issues exposure draft on Bima Sugam e-marketplace for insurance Blog Image

What’s in today’s article?

  • Why in news?
  • What is Bima Trinity?
  • What is Bima Sugam?
  • What are the benefits of Bima Sugam?
  • Will the physical mode go away?
  • What is Insurance Regulatory and Development Authority of India (IRDAI)?
  • News Summary: IRDAI issues exposure draft on Bima Sugam e-marketplace for insurance
  • Key highlights of the proposed guidelines

Why in news?

  • The Insurance Regulatory and Development Authority (IRDAI) has unveiled an exposure draft proposal for an insurance electronic marketplace called Bima Sugam.
  • Bima Sugam is pitched as the UPI moment for insurance and one arm of the Bima trinity.

Bima Trinity

  • Bima Trinity is a three-pronged strategy by the central government of India to increase insurance penetration.
  • It's an initiative by the IRDAI to increase the three As: availability, affordability, and accessibility of insurance products to a larger population.
  • Bima Trinity is made up of three components:
    • Bima Sugam: A digital portal that integrates distributors and insurers into a single platform
    • Bima Vistaar: An all-in-one insurance product that offers comprehensive insurance coverage at affordable prices
    • Bima Vahak: A women-led field distribution force

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.
  • Steps taken by IRDA
    • IRDAI has appointed a committee for the creation of the platform.
    • It now plans to go for requests for proposals soon to appoint a service provider for the platform.
    • The service providers will be the technological partners for creating and running a platform to provide all the services in one place.

Benefits of Bima Sugam

  • Single window for the policyholder
    • The proposed platform would act as a 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 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 which would universalise and democratise insurance.
    • 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.

Will the physical mode go away?

  • Customers will open an insurance account and the policies will be stored in this account, thus obviating the need for physical documents.
  • Identifying the right policy, buying it, settling the claims and renewals will be streamlined in online process.
  • The process will be mostly on the lines of demat accounts and online trading in the case of stock markets.

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.
  • It was established for overall supervision and development of the Insurance sector in India.
  • IRDAI's duties include:
    • Regulating the insurance business
    • Promoting the orderly growth of the insurance business
    • Protecting the interests of policyholders

News Summary: IRDAI issues exposure draft on Bima Sugam e-marketplace for insurance

  • IRDAI has issued an exposure draft on electronic marketplace Bima Sugam.

Key highlights of the proposed guidelines

  • Not-For-Profit Structure: Bima Sugam will operate as a not-for-profit company under Section 8 of the Companies Act, 2013.
  • Multi-Stakeholder Ownership: The shareholding of Bima Sugam will be widely held among life, general, and health insurers.
    • No single entity will be holding a controlling stake. This ensures a balanced and collaborative approach towards decision-making and operations.
  • Regulatory Oversight: IRDAI will play a crucial role in overseeing Bima Sugam's governance and operations.
    • The authority will nominate two members to the company's board and provide prior approval for the appointment of the Chairperson & CEO.
  • Risk Management: Bima Sugam will establish a dedicated risk management committee to identify and mitigate various risks associated with its operations.
  • Consent-Based Architecture: The platform will operate on a consent-based architecture, ensuring that users have control over their data and interactions within the marketplace, thereby enhancing trust and privacy.
  • Free Services for Consumers: Consumers will not be charged for availing services through Bima Sugam, making insurance products and services more accessible to individuals across diverse socio-economic backgrounds.

Q1) What is an Insurance?

Insurance is a legal agreement between an insurance company and an insured. The insured receives financial protection from the insurer for losses they may suffer under specific circumstances. 

Q2) What is India Stack?

India Stack is a collection of digital infrastructure and platforms, including open application programming interfaces (APIs) and digital public goods. It's the largest open API in the world.

Source: IRDAI issues exposure draft on Bima Sugam e-marketplace for insurance | Outlook India | Mint