IRDAI Proposes Draft Rules For Bima Sugam Free Online Insurance Marketplace

Bima Sugam—the Insurance Regulatory and Development Authority of India's brainchild conceived in 2022—is seeing some fruition.

On Feb. 13, the IRDAI issued a draft framework for Bima Sugam—Insurance Electronic Marketplace, which will pose as a one-stop solution for all insurance stakeholders, viz., customers, insurers, insurance intermediaries and agents.

The portal is expected to:

• protect the interests of policyholders,

• increase penetration of insurance in India  

• enhance availability, accessibility and affordability.

"Bima Sugam will be a one-stop shop for sales, service and claims," Debasish Panda, chairman of IRDAI, said in an earlier conference while talking about the platform. The platform, which is expected to provide an "end-to-end digital journey" will be a "gamechanger", he said. "There is a need to create it at the earliest."

The regulator has now gone ahead and suggested a draft regulatory framework for setting up Bima Sugam. As per the proposed draft:

• A not-for-profit company is to be set up under Section 8 of the Companies Act, 2013.

• The company shall establish, facilitate, develop, operate and maintain the marketplace for providing various services to the insurance stakeholders.

• Shareholding in the company will be widely held among life, general and health insurers.

• No single entity has a controlling stake.

• Shareholders shall contribute to capital as and when required.

• IRDAI would nominate two members on the board of the company.

• Board to constitute a risk management committee to mitigate various risks.

• Prior approval of authority for the appointment of the chairperson and CEO of the company.

• Consent based architecture for the services.

• Consumers shall not be charged for availing services from Bima Sugam.

The regulator has invited comments on the draft exposure by March 4, 2024.

Last week, the Life Insurance Corp. of India, in its board meeting, approved the proposal to invest Rs 1 lakh in cash towards the company being incorporated for the Bima Sugam platform.

This was, as the company had announced, towards the first tranche, where LIC will hold 8.3% of the initial capital. In the second tranche, it shall buy additional equity not exceeding 2%.

Siddhartha Mohanty, chairperson of LIC, had said that Bima Sugam "will happen for sure" and "is in the formative stage currently".