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IRDAI sets up a panel to evaluate applications under the regulatory sandbox

Regulatory Sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain relaxations for the limited purpose of testing. IRDAI invited applications for sandbox innovations between September and October 2019 and received 173 proposals.

IRDAI has asked insurance companies to launch their products on a pilot basis with a cap of 50,000 policies between February and July. Depending on the outcome, insurers may then file them as regular products.

Motor floater policy

ICICI Lombard General Insurance Co. Ltd., Reliance General Insurance Co. Ltd. and Edelweiss General Insurance Co. Ltd. plan to test a motor floater policy soon.

Shanai Ghosh, chief executive oflcer (CEO) and executive director (ED), Edelweiss General, said their product is an innovative app-based floater plan that will allow policyholders to cover any damage to their vehicles based on usage. The policy will cover multiple vehicles. “Premiums will be charged as per usage. So the customer has the flexibility of adding and deleting vehicles as required on the app. The cover can be switched on or off as per requirement," added Ghosh.

While the outline of the product has been presented by the insurers, details on calculation of the premiums and the benefits are yet to be finalized.

Pay as you drive

For the longest time, there have been discussions on how motor insurance premiums should be linked to the driver instead of the vehicle. It finally looks like there is some development on this front because insurers have taken the pay-as-you-consume model seriously and designed products that will make policyholders pay based on the kilometres travelled.

“We are also considering vehicle mileage during the policy period as a parameter. Lower the mileage, lower the probability of an accident. These products are already available globally," said Sanjeev Srinivasan, managing director (MD) and CEO, Bharti AXA General. Current market practices don’t incentivize policyholders with lower-than-average vehicle usage, but that may change now.

Friend assurance

While family health plans and employee group policies are quite common, a group policy to cover a bunch of friends was unheard of. Three insurers - Religare Health Insurance Co. Ltd., Max Bupa Health Insurance Co. Ltd. and Kotak Mahindra General Insurance Co. Ltd. - will offer this product. The group can have five to 30 individuals.

The policies will work well if the members are health conscious. “There would be discounts based on the group size, available on a normal policy premium. Also, there would be wellness-linked incentives at regular intervals," said Ashish Mehrotra, MD and CEO, Max Bupa Health.

Short-term health

Religare Health Insurance and Bharti AXA General Insurance Co. Ltd. have got IRDAI’s nod for their short-term health insurance product with a tenure of less than a year. “Customers may choose to take a plan for a short period during the emergence of certain diseases. The product will work as a litmus test for a customer entering the category for the first time and his experience could translate into a long-term purchase," said Srinivasan. The company will offer short-term critical illness, hospital cash and hospitalization covers that address specific illnesses.

“The policy will have a tenure of one to six months," said Shrotriya.