IRDAI’s Insurance Sandbox Triggers Innovations To Handle Covid-19-Like Disruptions
The first set of policies under insurance regulator’s sandbox mechanism are on test.
Motor insurance that freezes during a disruption like the coronavirus lockdown, premium based on how safely you drive, and a life cover specially targeted at those with seasonal incomes—these are among the first set of policies designed under the “sandbox approach” that the regulator has allowed to test.
The Insurance Regulatory and Development Authority of India had in August last year approved the mechanism to foster innovation and drive insurance reach in India. It allows companies to first test plans and services and then seek approval from the regulator. The IRDAI sought proposals in September and October last year.
The plans will be tested on real customers under the supervision of regulator and the final approvals are only expected after October, according to Rushabh Gandhi, deputy chief executive officer, IndiaFirst Life Insurance Company Ltd.
“The experiment period will be around six months. After that, the regulator will review the data to assess the success,” Gandhi told BloombergQuint. “It [IRDAI] will then form an internal committee to modify the product regulations. Insurers will be allowed to implement the plans only when these regulations are notified.”
ICICI Prudential Life Insurance Company Ltd., ICICI Lombard General Insurance Company Ltd., IndiaFirst Life Insurance Company and Edelweiss General Insurance Company Ltd. were among various other companies that received approvals to test their new policies and services:
ICICI Prudential Life Insurance
Health savings plan: It’s a combination of protection and a savings pool that can used for health-related expenses. Anything that insurance does not cover, or any expense exceeding the limit can be met through this health kitty.
Outpatient health cover: A significant amount of health expenses happen not due to hospitalisation but due on consultation, medicines and diagnostics. This plan covers such expenses and also offers tax benefit. It’s a first such cover to be offered by a life insurer.
Dynamic term cover: It offers on-demand life cover coverage to customers. For example, if a person travels overseas for 20 days, such a plan can cover the individual for that duration, unlike a regular life plan that is for the long term. Also, existing travel insurance doesn’t cover death.
Disease management programme: Plans to monitor and encourage customers with life policies to reduce lifestyle risks such as diabetes and hypertension and reward them for achieving the goals. The insurer said the company can benefit from the good health of the policyholders and customers who have been charged extra premium due to health issues can get these waived, depending on the results.
ICICI Lombard
Pay how you drive: Traditionally motor insurance policy premiums have been based on the type and age of the car. The company said it would “reward customers that follow safe driving practices”. An app will monitor the driving behaviour of customers and will notify them when they’re driving too fast and will also show their locations using GPS technology.
Pay as you drive motor cover: Similar to the ‘pay how you drive' model—this rewards customers that drive less.
Diabetes, cholesterol management: Customers who have diabetes are offered a disease management programme to reduce their HBA1C levels. It includes nutritionist counselling and coaching to help customers lead a healthier lifestyle through diet and exercise. Customers who show improvement will be rewarded with points that can be redeemed as a discount while renewing his cover. A similar plan has been launched for people with high cholesterol levels.
Motor floater: With this, customers can cover all their motor vehicles under a single policy similar to a health insurance policy where you can cover multiple people in a single policy. It can be clubbed with ‘pay as you drive’ or ‘pay how you drive’ plans to get a lower premium.
IndiaFirst Life
Loyalty Programme: IndiaFirst Life Insurance plans to offer a loyalty programme that will prompt customers to adopt a healthy lifestyle and make behavioral changes by offering additional rewards. People focused on a healthy and activity-based lifestyle will get benefits.
Insurance Khata: It’s another product from IndiaFirst Life aimed at those who get seasonal income. It allows customers to pay premium in tranches when they have cash. The cover is increased with every tranche. If a customer lives beyond the term, the company repays an amount equal to or more than the premium paid.
Edelweiss General Insurance
It will soon launch an app-based motor floater policy based on pay-as-you-use model. It allows consumers to pay the premium based on usage and also covers multiple vehicles under one policy. This will be driver-based policy that allows a user to switch insurance—a buyer can choose the vehicle to be insured via an app every time it’s used.
This will bring down premium for policyholders who own more than one vehicle. “This product is extremely relevant in today’s environment where you may not end up using your vehicle regularly,” said Shanai Ghosh, executive director and chief executive officer, Edelweiss General Insurance. “So if you don’t use, don’t pay for it.”
The product also covers the ongoing lockdown when people aren’t using their vehicles, the company said in response to BloombergQuint’s query.
Also Read: Covid-19 Insurance Plans: What Insurers Are Offering Amid Covid-19
While the final approvals to launch the policies will only come later, IRDAI’s sandbox approach will boost innovation, reduce the time-to-market and potentially lower costs, Sanjay Datta, chief of underwritings, claims and reinsurance at ICICI Lombard, told BloombergQuint.