The Insurance Regulatory and Development Authority of India (IRDAI) recently issued a significant notification regarding the Bima Sugam – Insurance Electronic Marketplace Regulations 2024. This comprehensive regulation aims to revolutionize the insurance sector by leveraging digital infrastructure. Let’s delve into the details.
Detailed Analysis
The notification outlines the objectives of the IRDAI (Bima Sugam – Insurance Electronic Marketplace) Regulations 2024, emphasizing empowerment and protection of policyholders, increasing insurance penetration, and fostering accessibility. It introduces the concept of a Digital Public Infrastructure, the Bima Sugam – Insurance Electronic Marketplace, envisioned as a unified platform for all insurance stakeholders.
Key Points Covered:
1. Establishment and Governance: The regulations mandate the formation of a not-for-profit company under Section 8 of the Companies Act, 2013, tasked with developing and maintaining the Marketplace. Governance structures, including board composition and risk management committees, ensure compliance and effective operation.
2. Functions and Responsibilities: The Marketplace is designed to offer end-to-end digital solutions, ensuring fair access, data security, and privacy. It facilitates the sale of insurance products, claims settlement, and grievance redressal while complying with applicable laws and regulations.
3. Security and Privacy: Stringent security measures are prescribed to safeguard data and ensure confidentiality. Participation in the Marketplace is contingent upon adherence to specified security protocols.
4. Revenue Model: The regulations mandate a self-sustainable revenue model for the company, with consumers not bearing any charges for utilizing Marketplace services.
5. Enforcement and Compliance: Provisions are in place for regulatory oversight, including inspections and inquiries by the Authority. Penalties are stipulated for violations, underscoring the importance of adherence to the regulations.
6. Guidelines and Directions: The Competent Authority retains the power to issue circulars, guidelines, and directions to ensure the effective functioning of the Marketplace and uphold the interests of insurance stakeholders.
Conclusion
The IRDAI’s issuance of the Bima Sugam – Insurance Electronic Marketplace Regulations 2024 marks a significant milestone in the evolution of the Indian insurance sector. By fostering digital innovation, enhancing transparency, and prioritizing consumer interests, these regulations pave the way for a more inclusive and efficient insurance ecosystem. Adherence to the prescribed frameworks and collaborative efforts from all stakeholders will be instrumental in realizing the vision of “Insurance for all by 2047.”
This detailed analysis provides insights into the key provisions and implications of the IRDAI’s latest notification, guiding stakeholders through the regulatory landscape and its potential impact on the insurance industry.
******
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, the 20th March, 2024
Insurance Regulatory and Development Authority of India (Bima Sugam – Insurance Electronic Marketplace) Regulations, 2024
F. No. IRDAI/Reg/5/199/2024.—In exercise of the powers conferred by clause (zd) of sub section (2) of section 114A of the Insurance Act, 1938, and clause (e) of sub-section 2 of section 14 and clause (e) of sub-section 2 of section 26 of the Insurance Regulatory and Development Authority Act, 1999, the Authority, in consultation with the Insurance Advisory Committee, hereby issues the following Regulations, namely: –
CHAPTER I
PRELIMINARY
1. Short title and commencement:
a) These Regulations may be called the Insurance Regulatory and Development Authority of India (Bima Sugam – Insurance Electronic Marketplace) Regulations, 2024.
b) These Regulations shall come into force from the date of their publication in the official gazette.
2. Objectives:
a) The Authority with the objectives to empower and protect the interest of policyholders, to increase penetration of insurance in India and to enhance accessibility, issues the IRDAI (Bima Sugam – Insurance Electronic Marketplace) Regulations 2024 for allowing establishment of a Digital Public Infrastructure called Bima Sugam – Insurance Electronic Marketplace. This shall be a one stop solution for all Insurance stakeholders such as consumers, insurers, intermediaries or insurance intermediaries and insurance agents to promote transparency, efficiency, collaboration across the entire insurance value chain, technological innovation in insurance sector, universalize and democratize insurance and to achieve the vision of “Insurance for all by 2047”. These Regulations specify the regulatory framework for establishment, governance and functioning of the Bima Sugam – Insurance Electronic Marketplace, the Company formed for this purpose and for matters connected therewith and incidental thereto.
b) Broad principles have been laid down in these Regulations to enable the functioning of the Company and the Bima Sugam – Insurance Electronic Marketplace. The Competent Authority may issue guidelines and circulars as the case may be under these Regulations considering the need for effective functioning of the Marketplace.
3. Definitions:
1. In these Regulations, unless the context otherwise requires:
a) “Act” means the Insurance Act, 1938 (4 of 1938);
b) “Authority” means the Insurance Regulatory and Development Authority of India established under sub-section (1) of Section 3 of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
c) “Company” shall mean the company formed in accordance with Regulation 4(a) of these Regulations;
d) “Consumer” for the purpose of these regulations shall mean prospect, policyholder, insured, nominee, beneficiary, claimant, in relation to an insurance policy;
e) “Competent Authority” means:
i) Chairperson, or
ii) such whole-time member or such committee of the whole-time members or such officer(s) of the Authority, as may be determined by the Authority;
f) “Bima Sugam – Insurance Electronic Marketplace” (hereinafter referred to as “the Marketplace”) is a robust Digital Public Infrastructure with open standards and interoperable platforms, enabling seamless integration with various services to facilitate inter alia purchase, sale, servicing of insurance policies, settlement of insurance claims, grievance redressal and other related matters as permitted by the Authority;
g) “Data Provider” means (i) any entity of the Central Government or State Government such as UIDAI, Digi Locker, Parivahan, Central KYC Record Registry, CBDT, government databases; or (ii) such other entity, which holds the data and makes it available to the entities and government authorities/entities.
h) “Insurance Stakeholders” means consumers, insurers, intermediaries or insurance intermediaries, insurance agents and any other service providers as permitted by the Authority.
2. Words and expressions used and not defined in these Regulations but defined in the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or the Rules or the Regulations notified there under shall have the meanings respectively assigned to them in those Acts or the Rules or the Regulations as the case may be.
CHAPTER II
ESTABLISHMENT, SHAREHOLDING AND GOVERNANCE OF THE COMPANY
4. Establishment and Shareholding:
a) Bima Sugam – Insurance Electronic Marketplace shall be established by a not for profit company formed under section 8 of the Companies Act, 2013.
Provided that no other person shall commence or operate with same or similar objectives of the Marketplace and functions of the Company.
b) The main objective of the Company shall be to establish, facilitate, develop, operate and maintain the Marketplace for providing various services to the insurance stakeholders.
c) The Company after incorporation shall file the Memorandum of Association and Articles of Association with the Authority. Any amendment to the Memorandum of Association of the Company shall be undertaken only with the prior approval of the Competent Authority.
d) The shareholding of the Company shall be widely held amongst Life Insurers, General Insurers and Health Insurers with no single entity having controlling stake. The Company shall transmit, issue any new shares or register transfer of any shares, only with the prior approval of the Competent Authority.
e) The shareholders shall contribute to the capital requirement of the Company on an ongoing basis for continuous upgradation and development of the Marketplace to ensure that the services are provided as per the objectives of these Regulations.
5. Governance:
1. The Company shall –
a) have well documented Board approved policies, procedures and governance arrangements for its functioning which shall inter alia include operational, risk management and internal controls; and
b) have upto two nominees from Insurance Regulatory and Development Authority of India on its Board.
2. In addition to the regular functions, the Board shall ensure –
i) that the Marketplace functions within the objectives of these regulations;
ii) its decisions reflect genuine and legitimate interests of insurance stakeholders;
iii) systems designed shall have high degree of security and privacy standards, operational reliability, adequate and scalable capacity;
iv) put in place appropriate business continuity plan considering external and internal disruptions.
3. The Board shall constitute a Risk Management Committee to ensure that there are operational and risk management policies, procedures, systems and controls that enable Company to identify, measure, monitor, manage and mitigate various risks including third party service providers. The Risk Management Committee shall periodically review the implementation of policies, procedures, systems and controls.
6. Appointment of Chairperson and Key Managerial Persons (KMPs):
a) The Company shall seek prior approval of Authority for appointment, re-appointment, termination and change in the terms and conditions of the appointment of the
i) Non-Executive Chairperson; and
ii) Managing Director and Chief Executive Officer.
b) The Company shall appoint Key Managerial Persons with appropriate experience, a mix of skills, and the integrity necessary to discharge their responsibilities for the operation and risk management of the Marketplace and clearly specify the roles and responsibilities of the management.
CHAPTER III
FUNCTIONS, DUTIES, AND RESPONSIBILITIES
7. Functions and Responsibilities of the Company and the Marketplace:
The functions of the Company and the Marketplace shall include the following :-
a) Creating efficient and effective end-to-end digital solutions in meeting the requirements of the insurance stakeholders and the market it serves.
b) Implementing consent based architecture for its services.
c) Allowing fair and open role-based access of its services.
d) Ensuring it is operative and accessible at all times.
e) Ensuring access to data providers with appropriate consent mechanism.
f) Storing, holding, maintaining, sharing and/or processing any data, in accordance with applicable laws, in furtherance of objectives of these Regulations.
g) Delivery of its obligations in accordance with the objectives of these Regulations.
h) To define and enforce the participation criteria and operating guidelines for the Insurance Stakeholders.
i) Any other function as may be specified by the Authority from time to time.
8. Duties and Responsibilities:
Insurers shall endeavor to facilitate availability of their insurance products for sale and necessarily provide all services related to an insurance policy including settlement of insurance claims, grievance redressal in the Marketplace on an ongoing basis.
CHAPTER IV
SECURITY AND PRIVACY
9. Security, Privacy and Participation:
The design of the Marketplace shall inter alia include the following:-
a) Appropriate security mechanism, up-to-date latest technology and privacy standards which will ensure open and fair access, confidentiality by adopting best practices to address current and future security requirements.
b) Participation to the Marketplace shall be subject to complying with the requirements and security protocols laid down by the Company.
CHAPTER V
SELF SUSTAINABLE
10. Revenue
a) The Company shall have a Board approved policy on a self-sustainable revenue model.
b) Consumers shall not be charged for availing the services of the Market place.
CHAPTER VI
MISCELLANEOUS
11. Power of the Authority to call for information, carry out inspection and enquiry
The Authority may conduct an enquiry or an investigation or an inspection of the books of accounts, records, documents and infrastructure, systems and procedures, of the Company. The Company shall provide all necessary documents and information and access as required whenever such inspections are carried out.
12. Penalty for certain violations/breaches
The Authority may initiate appropriate actions against the Company and/or the regulated entities for violation of the provisions of these regulations and relevant provisions of Act, Insurance Regulatory and Development Authority Act, 1999 and Rules and Regulations made thereunder, any circular/guidelines/order issued by the Competent Authority from time to time.
13. Powers to issue Circular, Guidelines and directions
a) The Competent Authority may issue circulars, guidelines and directions, if necessary, in relation to the Marketplace and the Company.
b) The Competent Authority may also issue directions to the Company, established under these regulations, in the interests of Insurance Stakeholders.
14. General Power to remove difficulties and issue clarifications – In order to remove any doubts or the difficulties that may arise in the application or interpretation of any of the provisions of these regulations, the Competent Authority may issue appropriate clarifications or guidelines or circular or direction as deemed necessary.
DEBASISH PANDA, Chairperson
[ADVT.-III/4/Exty./848/2023-24]
