The Insurance Regulatory and Development Authority of India (IRDAI) has given its approval to Bima Sugam, a digital platform hosting all life and general insurance policies for sale that has been likened to an Amazon of insurance, referring to the online retail giant.
IRDAI has told its regulated insurers to become part of the platform by January 2023, CNBC reported.
Bima Sugam will function as a centralised marketplace for insurance, hosting the sale, servicing and claims functions for all life and general policies. According to the report, intermediaries, such as brokers, banks, insurance agents and aggregators like PolicyBazaar, will use Bima Sugam in selling insurance policies to individuals. Consumers can also buy life, motor and health insurance products directly from the platform. All insurance contracts bought through Bima Sugam are digitised.
Bima Sugam is expected to bring down the cost of insurance by reducing the commissions paid to intermediaries. The report said that Bima Sugam could lower the portion of life insurance premium paid as commissions from around 30% to 5%.
To get Bima Sugam off the ground, around INR850 million (SG$1.5 million) in capital is needed. Insurance companies are expected to be the major shareholders in the platform, with around 30% of capital provided by life insurers and another 30% from general insurers. The platform will add more insurers as investors as more funds are required.