Insurance Regulatory and Development Authority of India (IRDAI) on Friday launched the Regulatory Sandbox system for innovative technology-led entities to enable them limited-scale testing of a new product or service before a wider-scale launch. The launch of the sandbox experiment may or may not involve some relaxation in a regulatory requirement, IRDAI said.
Regulatory Sandbox is an infrastructure that helps financial technology (FinTech) players live test their products or solutions, before getting the necessary regulatory approvals for a mass launch, saving start-ups time and cost. IRDAI will start receiving applications under Regulatory Sandbox from September 15 to October 14, 2019.
“IRDAI is delighted to offer Sandbox environment to upcoming InsureTech ideas and to nurture them within controlled ecosystem so that the Insurance sector in India becomes more competitive in offering world class products and services to customers,” IRDAI Chairman SC Khuntia said.
Sujay Banarji, Member— Distribution, IRDAI, said “Regulatory Sandbox will foster collaboration and further the interests of all stakeholders i.e. regulator, insurance companies, start-ups and end consumers”.
He urged insuretech firms to use the facility to test new products and services. The initiative was launched during the opening session of a workshop on Regulatory Sandbox organised by IRDAI in partnership with Confederation of Indian Industry.
The sandbox approach can be used to carve out a safe and conducive environment to experiment with innovative approaches (including FinTech solutions), and where the consequences of failure, if any, can be contained, the regulator said. It has created the regulatory sandbox 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.
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 at striking 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.