First Insurance Plan Launched Under Regulator’s Sandbox Approach
The insurance regulator allowed the first policy under its sandbox approach that lets insurers launch unconventional products on a pilot basis before seeking its approval.
The micro-insurance plan by IndiaFirst Life Insurance Company Ltd. is aimed at those with seasonal incomes, working in the unorganised sector or belonging to underserved sections. Called Insurance Khata, it lets buyers pool multiple single-insurance plans in one account.
“Although sandbox has not picked up well, we want insurers to think out-of-the-box,” Nilesh Sathe, member (life) at the Insurance Regulatory and Development Authority of India said on the sidelines of an insurance summit held in Mumbai on Dec. 11. “They should come out with a product and try to sell it. If it picks up, then I can come out with a normal ‘file and use’ procedure.”
That allows insurers to launch a new insurance plan immediately in the market. The companies get the flexibility to either withdraw or tweak it based on the response it receives. Once tested, the regulator gives its final approval for the product.
IndiaFirst’s scheme can be bought for a term of five, seven or 10 years through a one-time payment of a premium of Rs 500 to Rs 15,000. Multiple plans can be held in the same account.
As there are no such recurring single-premium plans in the market, it has been recognised as an innovative product by the regulator, RM Vishakha, managing director and chief executive officer at IndiaFirst Life, said. “It sets the tone to encourage insurance companies to look at the policyholder and not let regulations really be the constricting force in order to think of a new product.”