In its bid to increase the penetration of insurance in India, the Insurance Regulatory and Development Authority of India (IRDAI) has approved a total of 33 proposals for coming of age and innovative financial products under regulatory sandbox. Regulatory Sandbox initiative is meant to help Fintech companies to innovate products and test them commercially without fear of compliance issues or failures. The insurance products released under this sandbox include a floater motor policy, group health cover for friends, and short-term insurances among others.
Floater Motor Policy
It is a policy where any number of vehicles by the same owner can be covered under one policy. The customers will have the option to add or remove vehicles on an app-based interface. The premiums are decided based on the usage. This customisable policy will factor in driving behaviour, mileage of vehicles etc., and will also reward safe drivers. This model, popularly known as ‘pay as you consume’ model is likely to gain more popularity among Indian consumer base as people are going for light driving with the advent of app-based cab services.
ICICI Lombard General Insurance Co. Ltd, Reliance General Insurance Co. Ltd and Edelweiss General Insurance Co. Ltd plan to test a motor floater policy soon.
Group Health Cover
This is another floater policy where a group of friends can opt for a policy. We have heard of policies for families or employees of one organisation, but the policy for a bunch of friends is a new idea. Three insurers—Religare Health Insurance Co. Ltd, Max Bupa Health Insurance Co. Ltd and Kotak Mahindra General Insurance Co. Ltd—will offer this product. The policy will help a group of5-30 people avail combined benefits of insurance. Each individual member will pay the premium, and they will get a particular sum assured along with the floater sum assured. The calculation of premium rates will be based on the cumulative profiles of group members based on their health consciousness.
Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance said that “The individual premium in the group will be lower compared to what a traditional policy will offer as we’ll be able to offer them better rate because all will come together. There will also be wellness-linked incentives”.
Religare also plans to refund some amount (~15%) of the premiums paid by the individuals if no claims are made within a specified period.
Religare Health Insurance is also planning to include OPD expenses in the plan, which is rarely covered by usual health insurance plans. ICICI Lombard General Insurance and Bajaj Allianz’s plans will be based on app-monitored health programs.
Short Term Health Cover
IRDAI also approved the short-term health insurance plan by Religare Health Insurance and Bharti AXA General Insurance Co. Ltd. In this plan, the customers can take a policy for short term during the emergence of a particular disease. They may opt long-term plans if their experience is satisfactory. The policies will range from being as short as one month to up to six months. This may be beneficial for people visiting the country for a short period or people who generally get health insurance with their job but are currently taking a break.
Along with these, a multitude of other policies like need-based health covers, ‘payment through reward points policy’, ‘Gift insurance Policy’ etc. have been approved by IRDAI.
All these policies are being launched products for the six months between February 2020 and July 2020 on a pilot basis to test the response of the market towards them. The detailed rules for premiums and benefits are yet to be clearly laid down. Since these products are being launched in the regulatory sandbox, the companies will continue them only if they can attract clients and seem profitable in the long run.
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