Insuring India’s Digital Leap: Regulatory Updates Propelling Insurtech Innovation
For all of India Inc’s prowess in leveraging Digital Public Infrastructure (DPI) to accentuate digitization and financial inclusion of our en masse, India continues to be underserved in terms of ensuring insurance coverage to the world’s most populous country. The penetration of insurance in relation to the GDP (metric computed as total annual premiums/GDP) stands at a meager 4.2%, which lags the global average of 7%.
The Insurtech landscape India is at an inflection point: witnessing tailwinds from both, the demand and supply factors. With growing per capita & household income, increased percolation of financial literacy, multitude of insurance products available across multiple price ranges, inclusive of subsidized policies provided by schemes such as Aam Aadmi Bima Yojana, Ayushman Bharat Yojana, there is a definitive growth trajectory impending, setting the base for Insurtech ventures to encroach the space and capitalize on the whitespaces across insurance value-chains.
IRDAI- the erstwhile regulator has had a positive & forward-looking disposition in propelling its Insuring India by 2047 vision. The segment has garnered stakeholder attention of late and the policy changes have only amplified the developments in the space. The regulator’s annual congregation resulted in 8 regulations being approved and may very well live up to its moniker: Regulatory Revamp: A Paradigm Shift. Here are a few developments which we believe may be catalytic in terms of impact on the Insurtech ecosystem:
- IRDAI (Bima Sugam — Insurance Electronic Marketplace) Regulations, 2024
Development of DPI — electronic marketplace to bring about a ‘UPI-Like’ impact for universalization of insurance. The marketplace is touted to be the ‘one stop solution’ for all stakeholders alike: brokers, customers, intermediaries in a quest to promote transparency, efficiency and to foster collaborative relationships. This may lead to Insurtech’s adopting the standardized API stack providing access to centralized databases for products.
Read more on Bima Sugam here.
2. IRDAI (Insurance Products) Regulations, 2024
The new ordeal merges six regulations to provide a uniform framework aimed at bringing agility to insurers for accommodating market demand, enhancing ease of conducting business and addressing focal points such as principles governing guaranteed surrender value & special surrender value along with disclosures thereof.
That said, the regulator also exudes prudence in awarding ‘insurance product manufacturing’ license to new-age ventures, exercising caution in the best interest of policyholders. Venture backed Insurtech's have not been recipients of insurer licenses due to plausible concerns. Some of these concerns emanate from recent spates of financial irregularities and to negate this, IRDAI has increased stringency on net worth requirements of the promoters and founders alike.
To read more on this, click Here.
India’s Insurtech realm is at the cusp of being upended by innovation, regulatory tailwinds and a multitude of factors and we, at Capital-A, strive to partner with zealous founders solving for meaningful issues and our investment in Bharatsure reflects our stance on the same.
As the insure-tech space undergoes dynamic changes, we, at Capital-A, are active proponents for innovative disruptions & support enablers of the same. If you are an operator, founder, or investor enthusiast in the Insure-tech domain — we would love to chat. Please reach out to aswani@capital-a.in, raashi@capital-a.in, aditya@capital-a.in, hello@capital-a.in.
