Insurance regulator IRDAI on Thursday said regulations pertaining to the Regulatory Sandbox approach to promote innovation in the sector had been notified.
Stating that the IRDAI (Regulatory Sandbox) Regulations, 2019 were notified on July 26, the regulator said guidelines on the operation of the Regulatory Sandbox, outlining the procedure to be followed in implementing the “innovation in insurance” programme, figured in them.
The regulations seek to strike a balance between orderly development of insurance sector on one hand and protection of interests of policyholders on the other, while facilitating innovation. The aim is to facilitate creation of a regulatory sandbox environment, and relax provisions, if required, of any existing regulations.
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Insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing are areas where application for implementing the innovative solutions can be made. As a first step, the authority will be inviting applications for the Regulatory Sandbox from September 15 to October 14.
According to the regulations, Regulatory Sandbox means an environment used in the financial services sector that provides testing ground for new business models, processes and applications which may not necessarily be covered fully by or are not fully compliant with existing norms.
Sandbox environment means a testing environment designed for experimentation for a specific period of time.
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A release from IRDAI said the regulatory sandbox approach can be used to carve out a safe and conducive environment to experiment with innovative approaches, including fin-tech solutions, where the consequences of failure, if any, can be contained.