New Delhi: Insurance regulator Irdai has set up a single point contact for its regulatory sandbox (RS) initiative, wherein financial technology firms can seek permission to experiment with innovative approaches for the growth of the sector.
Regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of the testing.
The Insurance Regulatory and Development Authority of India (Irdai) has already invited applications for the sandbox from 15 September to 14 October 2019.
The sandbox approach can be used to carve out a safe and conducive environment to experiment with innovative approaches (including Fin-Tech solutions), and where the consequences of failure, if any, can be contained, the regulator said. It has created the RS with an objective to use innovative ideas to foster growth and increase the pace of most innovative companies, in a way that provides flexibility in dealing with regulatory requirements and at the same time focussing on policyholder protection. Irdai said it has nominated Sanjay Verma, DGM (Distn Dev) as the "Single Point of Contact on regulatory sandbox matters". The nominated contact will interact and guide the applicants.
On regulatory relaxation, the Irdai said it may consider granting limited regulatory relaxation to the proposal that promotes innovation in insurance in India.
However, no relaxation would be offered in respect of compliance with the Insurance Act, 1938, the IRDA Act, 1999 or any other applicable statutory provisions. The IRDAI (Regulatory Sandbox) Regulations, 2019 was notified last month.
The regulations are aimed to strike a balance between orderly development of insurance sector on one hand and protection of interests of policyholders on the other, while at the same time facilitating innovation.
Another objective is to facilitate creation of regulatory sandbox environment and, if deemed fit, to relax such provisions of any existing regulations as needed, the Irdai added.
The 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 innovations, while carefully monitoring and containing their risks.