When the Unified Payments Interface (UPI) was officially launched by RBI in 2016, it became a pivotal moment in the digital finance sector. It brought the unbanked sector of the population under the banking umbrella and allowed them an option to digitally transact and not lean heavily on physical currency. Now, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed a new platform called Bima Sugam, which it claims will bring about the same revolution UPI did, and will spark a revolution in the insurance sector with its own ‘UPI moment’. Let us take a look.
“The recent initiative by IRDAI Bima Sugam is perceived to be a big game changer in the general insurance market development. It is a revolutionary step with ambitions of becoming the largest online market for insurance products and services which has not been practiced anywhere in the world,” said Sanjiv Singh, Head, Marine & Specialty lines, General Insurance Council in a press release.
“Going by the diversity and the size of India's population it may prove to be quite successful and a model for other developing economies. It will facilitate convergence of all stakeholders and insurance services in a single place,” he added.
Bima Sugam is proposed to be an online marketplace for insurance services. It is a one-stop digital platform, akin to Amazon, and it will offer a multitude of services including purchasing all kinds of insurance (life, health, and general including home and motor) from different insurance companies, managing policies, portability, changing agents, claim settlement, and more.
All of it will be done through a single portal and in a paperless and digital format. Insurance aggregators, especially those who function online, will become facilitators of this platform. Further, insurance companies will become major stakeholders of the platform and will focus on providing insurance services to customers via an e-insurance account (E-IA).
The platform will also function as a centralized database for all insurance-related needs, which will bring its own advantages. Insurance companies would not have to worry about maintaining their individual databases and the entire hierarchy will have access to the data within their domain to quickly assess the policyholder’s claim. This will effectively improve the speed of disbursement of claims as well as reduce the need for constant back-and-forth communication with the agents.
Another benefit perceived from this portal is the reduction in commission paid to intermediaries and the improvement in their operational efficiency.
IRDAI has appointed a committee to create the portal and make it ready to be deployed. The expected date of launch could be June 2024. It should be noted that the project has already missed its original deadline of January 2023, and the extended deadline of August 2023.
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