Bima Sugam is an electronic insurance marketplace proposed by the Insurance Regulatory and Development Authority of India (IRDAI) to provide a one-stop online shop for all insurance policies. The IRDAI has released draft regulations for Bima Sugam, which aims to protect and empower policyholders’ interests, increase insurance penetration in India, and enhance availability, affordability, and accessibility of insurance products and services.
What is Bima Sugam?
According to the IRDAI press release dated February 13, 2024, Bima Sugam shall be a one stop solution for all insurance stakeholders such as customers, insurers, intermediaries or insurance intermediaries and insurance agents to promote transparency, efficiency, collaboration across the entire insurance value chain, technological innovation in insurance sector, universalize and democratize insurance and to achieve the vision of “Insurance for all by 2047”.
How will Bima Sugam work?
The IRDAI has proposed to establish a not-for-profit company under Section 8 of the Companies Act, 2013 to facilitate, develop, operate and maintain the marketplace for providing various services to the insurance stakeholders. The shareholding of the company will be widely held amongst life, general and health insurers and no single entity will have a controlling stake. The IRDAI will nominate two members on the board of the company and approve the appointment of the chairperson and CEO. The company will also have a risk management committee to mitigate various risks. The marketplace will follow a consent-based architecture for the services and will not charge any fee from the consumers.
What are the benefits of Bima Sugam?
Bima Sugam is expected to offer several benefits to the insurance sector and the consumers such as:
- It will enable easy comparison of insurance products across different insurers based on features, benefits, premiums, exclusions, etc.
- It will facilitate online purchase, renewal, portability and cancellation of insurance policies with minimal documentation and hassle.
- It will provide a platform for policyholders to access their policy details, claim status, grievance redressal, etc. at any time and from anywhere.
- It will allow insurers to reach out to a wider customer base and offer customized products and services based on data analytics and customer feedback.
- It will promote innovation and competition in the insurance sector and improve the quality and efficiency of service delivery.
What are the challenges
Bima Sugam is an ambitious project that may face some challenges in its implementation such as:
- It may require significant investment in technology infrastructure, security systems, data privacy measures, etc. to ensure smooth functioning of the marketplace.
- It may face resistance from some existing intermediaries or agents who may perceive it as a threat to their business model or commission structure.
- It may need to ensure compliance with various legal and regulatory norms related to consumer protection, anti-money laundering, cyber security, etc.
- It may have to deal with issues such as customer education, awareness, trust, adoption, etc. to ensure effective utilization of the marketplace.
Bima Sugam is a novel initiative by the IRDAI to create a digital public infrastructure for the insurance sector that will benefit all the stakeholders. It is expected to revolutionize the way insurance is bought and sold in India and contribute to the vision of “Insurance for all by 2047”. However, it also poses some challenges that need to be addressed before it becomes fully operational.
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