News:Insurance Regulatory and Development Authority of India (IRDAI) has launched the Regulatory Sandbox system for innovative technology-led entities.
About Regulatory Sandbox:
- Regulatory sandbox(RS) is an infrastructure that helps financial technology (FinTech) players live test their products or solutions before getting the necessary regulatory approvals for a mass launch.
IRDAI Regulatory sandbox:
- For the regulatory 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.
- These five categories are namely (a)insurance solicitation or distribution (b)insurance products (c)underwriting (d)policy and (e)claims servicing.
Benefits of Regulatory Sandbox:
- The regulatory sandbox will help fintech companies launch innovative products at a lower cost and in less time.
- The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services.
- These companies will also be able to test the viability of the product without a wider and expensive rollout.
- It will help companies to experiment with fintech solutions, where the consequences of failure can be contained and reasons for failure analysed.
- Financial technology (Fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services.
- The IRDAI is an autonomous,statutory body created by IRDA Act,1999.It was created based on the recommendations of the Malhotra Committee. It’s headquarters is in Hyderabad.
- The functions of IRDA includes (a)regulating the insurance industry and protects the customers (b)promotion of competition to enhance customer satisfaction and (c)lowering premiums for ensuring the financial security of the insurance sector.