The Insurance Regulatory and Development Authority of India (IRDAI) will soon allow the use of regulatory sandbox(RS) to promote new, innovative products and processes in the industry.
Regulatory sandbox is an infrastructure that helps fintech players live test their products or solutions before getting the necessary regulatory approvals for a mass launch, saving start-up time and cost.
In February 2019,the IRDAI had recommended setting up a regulatory sandbox to test new digital and tech-based innovations before launching them in the market.A committee was also set up by the IRDAI.It has already submitted its final recommendations.
For the IRDAI sandbox,an applicant should have a net worth of Rs 10 lakh and a proven financial record of at least one year.Companies will be allowed to test products for up to 12 months in five categories.
The committee has suggested the setting up of a core sandbox committee with dedicated personnel to monitor and supervise the digital innovations and also facilitate the roll-out of experiments and to provide the ecosystem required for the experimentation.
The committee has also recommended strict requirements of confidentiality to protect the data of policyholders and has also proposed defined entry and eligibility criteria, boundary conditions along with appropriate controls for protection and risk management.
FinTech or financial technology is an industry comprising companies that use technology to offer financial services.These companies operate in insurance,asset management and payment and numerous other industries.