The Insurance Regulatory and Development Authority of India (IRDA) is working on the guidelines for ‘Sandbox’ method which will allow insurers to test products in a particular geography or among a set of few policyholders before they are available in the market. The regulator has also asked insurance firms to come out with long-term health insurance policies, which are currently only available in two wheeler and four wheeler insurance.
“There are some new types of products which have not been tested out. Suppose some companies want to experiment with innovative products then we can allow them through a regulatory sandbox method where in a limited scale, either for a limited geography or a limited number of policyholders it will be tried out, so we will allow them,” IRDA Chairman SC Khuntia said.
The Supreme Court had recently turned down the last-ditch attempt by the general insurers to extend the time-frame for implementing its order on issuing long-term motor policies. Insurers now issue one-year medical policy in the health segment which is renewed every year depending on several terms and conditions.
“Persistency levels need to be improved. Affordability and misselling are two factors that impact the persistency of life insurance policies. If we improve this persistency, we will have much more money available and that will go to long-term savings which will result in much higher economic development in the country because long-term projects need a type of funding that can be supplied only by the insurance industry because we can invest it for a much longer period of time,” Khuntia said.
Khuntia said the regulator will set the timeline for Life Insurance Corporation’s reduction in stake in IDBI Bank to 15 per cent once their deal with bank is complete.