 "Bima Sugam is a game-changer, says Irdai chairman Debasish Panda")
Just as the Unified Payments Interface (UPI) has transformed the payment and banking sectors, the insurance regulatory and development authority of India (Irdai) is hoping that its ambitious project Bima Sugam— an online marketplace to buy service, and sell insurance products — will transform the insurance sector and help increase penetration.
“Bima Sugam will be the game-changer,” said Debasish Panda, chairman, Irdai at the Business Standard BFSI Insight Summit 2024.
“Bima Sugam is going to be a public digital infrastructure, keeping the policyholder at the core to offer an end-to-end journey of the lifecycle of the product and beyond. It will help customers to exercise their choice, and distributors will benefit immensely as they will be able to complete a transaction at a cheaper price and in less time,” Panda said.
Bima Sugam India Federation, the not- for-profit entity backed by the Irdai, will house Bima Sugam, the platform aimed at democratising insurance in India and potentially becoming the first of its kind globally. This single-window digital platform will serve as a marketplace where consumers can compare, purchase, and manage insurance policies across life, health, and general insurance sectors.
It is a part of the Bima Trinity including Bima Vistaar, the insurance product which will be sold by Bima Vahaak, the women centric agents’ force who will sell this product on Bima Sugam.
On November 1, Prasun Sikdar took charge as the first managing director and chief executive officer of Bima Sugam for three years. Two additional officials are also in the process of being appointed.
“It facilitates easy access to insurance for consumers and enhances distribution opportunities. Today we need perhaps three times the number of distributors that we have to cater to 1.4 billion people,” Panda said, adding that Bima Sugam allows the distributors to sell more products because everything is online.
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“The customer need not give an ID requirement because it gets auto-populated through Aadhaar, as Bima Sugam will be connected with India Stack. The payment will happen through the UPI, and the underwriting machine of the respective companies works immediately to generate policies, and the policy goes to the customer in a digitised format. So, the distributors become more efficient, and their remuneration will grow,” Panda added.
Panda also emphasised that the time may have come for the central government to consider opening up the sector to 100 per cent foreign direct investment (FDI).
In 2021, the government passed the Insurance Amendment Bill, which raised the FDI limits via the automatic route in insurance from 49 per cent to 74 per cent.
“Perhaps it is time to open up the insurance sector for 100 per cent FDI so that there could be more players who want to come to India to operate on their own terms without trying to look for an Indian partner. If somebody comes at 74:26, that is also fine. But opening up the sector for 100 per cent FDI will attract more investments,” Panda said.
“When we are talking about ‘Insurance for All by 2047’, obviously we need a lot of capital, which means we need a lot of new entities to come in. Some consolidation may also happen. If the FDI route is also opened, that will just augment the domestic investment; otherwise, the domestic investment may get crowded”, he added.
Panda highlighted the role that Irdai has played in easing regulations to attract more investments, with a focus on making policyholders the central priority.
“For Irdai, the policyholders remain at the core. What we are looking at is how insurance could be made available, accessible, affordable, and, over and above that, how we build trust for insurance as a product,” he said.
“To do that, first and foremost, (we had) to revamp the regulatory system. We have moved away from a rule-based to a principle-based approach. I would give full credit to my team at Irdai, who took up this challenge to create this framework, which is evincing interest from international investors,” Panda added.
Panda emphasised that technology is the uppermost in the mind of Irdai after regulatory revamping. The pricing part has also been looked at so that insurance can be affordable.
“But we don’t want to micromanage...we want the market to determine pricing. However, we have built safeguards to protect the policyholders. Hence, we have introduced a limit on expenses at the company level, which allows the companies to decide how they want to remunerate their distributors and management,” he said.