The Insurance Regulatory and Development Authority of India (IRDAI) has issued an exposure draft for Bima Sugam, an electronic insurance marketplace. This initiative is poised to transform the insurance landscape by creating a digital platform where insurers, policyholders, and intermediaries can converge seamlessly.
By adopting a structure similar to Unified Payments Interface (UPI), Bima Sugam aims to revolutionise the insurance purchase and servicing process.
Here are some key points that indicate the potential for Bima Sugam to usher in a UPI moment for the insurance sector in India:
A digital marketplace for all insurance needs
Bima Sugam can be envisioned as an Amazon-like marketplace for insurance, allowing policyholders to compare premiums and purchase a wide array of insurance products, including life, health, motor, and travel insurance.
It will offer the convenience of direct purchasing through the platform or via agents who can source policies from Bima Sugam.
The platform is set to list insurance products from all life, health, and general insurance categories, providing a comprehensive one-stop shop for insurance needs.
It must be noted that players like Policybazaar, PhonePe, InsuranceDekho already operate in the same space.
Enhancing availability, accessibility, and affordability
According to IRDAI, Bima Sugam aims to enhance the availability, accessibility, and affordability of insurance products.
In terms of availability, the platform is expected to catalyse insurance penetration in tier II and III regions.
Accessibility is key, as all insurers, policyholders, aggregators, and agents will have access to Bima Sugam.
Crucially, Bima Sugam will operate as a not-for-profit entity, potentially lowering commissions on insurance policies. This reduction in commissions is anticipated to translate into more affordable insurance products, benefitting policyholders.
Key features of Bima Sugam as outlined by IRDAI
The shareholding of Bima Sugam will be widely distributed among life, general, and health insurers, ensuring no single entity holds a controlling stake.
The regulator will nominate two members on the board, and the platform will have a risk management committee.
Importantly, consumers will not be charged for availing services on Bima Sugam, aligning with IRDAI's goal of making insurance accessible to all.
Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, emphasised the guidelines' focus on streamlining the entire insurance value chain, from policy issuance to claim settlement, fostering transparency and collaboration at every stage.
He sees these initiatives as crucial in driving insurance penetration and achieving the vision of ‘Insurance For All by 2047.’
Launch and delays
Initially slated for a January 2023 launch, Bima Sugam has faced delays attributed to complexities involving stakeholders and technical challenges.
