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22nd August, 2019

Guidelines on operational issues pertaining to the Regulatory Sandbox

As per Regulation 13(3) of the IRDAI (Regulatory Sandbox) Regulations, 2019, the Authority hereby issues the following guidelines on operational issues pertaining to the Regulatory Sandbox.

The following procedure will be followed for the implementation of “innovation in insurance” programme through Regulatory Sandbox.

1) Application for grant of permission for promoting innovation in insurance in India -An applicant desiring to promote or implement any innovation in insurance in India shall make an application to the Authority in Form-RG-1 in any one or more of the categories given in Regulation 4 of the IRDAI (Regulatory Sandbox) Regulations, 2019.

2) Innovation in insurance in India

a. Every applicant shall demonstrate to the Authority that the proposal for innovation will help increase insurance penetration or provide enhanced services to the policyholders.

b. The proposal shall not be made merely for the sake of seeking a regulatory relaxation but shall be a genuine innovation.

c. The decision of the Authority on whether the proposal is an innovation or not shall be final.

3) Single Point of Contact

a. The applicant shall nominate an experienced and responsible person to be the single point of contact for interacting with the Authority on the application submitted.

b. The Authority shall also nominate a single point of contact for interacting with the applicant and to facilitate provision of guidance to the applicant.

c. All communication shall be routed through these single points of contact.

4) Regulatory Relaxation

a. The Authority may consider granting limited regulatory relaxation to the proposal that promotes innovation in insurance in India.

b. However, no relaxation shall be offered in respect of compliance with the Insurance Act, 1938 or the IRDA Act, 1999 or any other applicable statutory provisions.

5) Disclosure to the customers/ participants by the applicant

a. The customers participating in the proposal shall be clearly informed that they are participating in a proposal whose outcomes are not certain.

b. Prior consent of the customers shall be taken regarding their willingness to participate in the proposal.

c.The applicant shall ensure that the customers participating in the proposal have made a voluntary and conscious choice.

6) Size ofthe proposal –

a. The proposal shall come to an end if any of the following stipulated time:

i. Number of customers- 10,000;

ii. Premium collected- Rs. 50 lakh;

iii. Any other parameter(s) decided by the Authority.

7) Application for innovation in defined categories

a. (i) An application for innovation in insurance involving underwriting or product category or both shall be filed by any applicant in association with any insurer(s).

(ii) An application involving an activity other than underwriting or product category may be filed singly or jointly by any applicant.

b. The Application shall specify in clear terms the regulatory provisions that need relaxation to execute the proposal.

Provided that the Authority reserves the right to limit the relaxation in the matters conceming the protection of the interests of policyholders and grievances redressal procedures.

Provided further that the relaxation sought shall not be prejudicial to the interests of
the existing policyholders and shall help in furthering the insurance penetration or policy servicing to the policyholders.

c. The applicant shall specify the potential risks that are inherent in the proposal as evaluated and the measures that are taken to eliminate or mitigate the risks.

d. Every proposal shall be approved by the highest decision making authority with reference to the applicant, such as Board in case ofa company.

e. The applicant shall put in place measures for closely monitoring the implementation ofthe proposal and shall update the Board or the highest decision making authority on the status on a periodic basis.

8) Accounting treatment of expenses on the proposal for innovation –

a. Expenses incurred on the proposal shall be maintained separately and shown as a line item in the Annual Report. In case of insurers such expenses shall be charged to the shareholder’s accounts or its equivalent.

9) Migration of policies and services at the end of proposal period-

a. The applicant may continue offering the service or the product on a regular basis in the market on lines ofany other services and products under the applicable regulatory framework with necessary approval of the Authority.

b. If the policyholder does not continue with the service or product, then the applicant shall honour the existing liabilities in accordance to the agreed terms and conditions.

10) Confidentiality of personal information and data security –

a. It shall be the duty of every applicant to keep the personal information collected during the course of the business transaction confidential and prevent its misuse.

b. The applicant before commencing the operations shall put in place measures to
maintain confidentiality of policyholder data and adequate systems to prevent
manipulation of records and transactions.

c. The safeguards put in place shall be reviewed on a continuous basis.

d. Where any other person (other than an insurer or an insurance intermediary) engages with an insurer or insurance intermediary in executing the innovation, it is the duty of the insurer or the insurance intermediary, as the case may be, to ensure that no personal information pertaining to the policyholders is parted or retained with that other person.

e. Where an insurer, insurance intermediary and the third party are jointly involved in implementing the innovation, it is the responsibility of the insurer and insurance intermediary to ensure that personal data of the policyholder is not parted or retained by the third party.

11) Grievances –

a. The applicant shall put in place a mechanism to address policyholders’ grievances.

b. The grievances of policyholders shall be attended to within the time frame specified by the Authority from time to time.

c. The insurer or insurance intermediary, as the case may be, are responsible to dispose off the grievances in accordance with the extant regulatory norrns.

12) Other issues – The applicant shall immediately report to the Authority of any regulatory or supervisory action taken against the proposal by any Government or other Regulatory Authorities with full details including the penalty imposed, if any, administrative action taken and the remedial steps taken by it to prevent such recurrence.

13)Reporting requirements –The applicant shall submit to the Authority the reports as specified by it while approving the proposal.

14) Further powers of the Authority

a. Power of the Chairperson to issue clarifications: In order to remove any difficulties in respect of the application or interpretation of any of the provisions of these Guidelines, the Chairperson of the Authority may issue appropriate clarifications from time to time.

Dr. Subhash C. Khuntia

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