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| Bima Sugam: Transforming India's Insurance Accessibility |
The Insurance Regulatory and Development Authority of India (IRDAI) has recently introduced draft regulations to establish Bima Sugam as a not-for-profit entity. This initiative aims to create an online insurance marketplace that caters to all stakeholders, with a primary objective of democratizing insurance access through technological innovation and fostering transparency and collaboration within the industry.
Key Features:
- Non-Profit Status: Bima Sugam is incorporated under Section 8 of the Companies Act as a non-profit entity. Its focus lies on public service rather than profit maximization or shareholder returns.
- Zero Charges: Importantly, Bima Sugam is mandated not to levy any fees on consumers for availing services on its platform. The platform's revenue generation relies on alternative sources to ensure affordability for all.
- Data Privacy: Bima Sugam is restricted from storing customer data to prevent any potential misuse. The board is entrusted with implementing robust data privacy protection policies to ensure the security of user information.
- Governance Framework: The operational oversight of Bima Sugam is vested in a board comprising IRDAI nominees and the CEO. Shareholding within the company is diversified among life, general, and health insurers, without any single entity holding a controlling stake. The appointment of key personnel, including the chairperson and CEO, requires prior regulatory approval. Additionally, the board is mandated to establish a risk management committee.
- Sustainable Finances: Shareholders are committed to infusing capital when necessary, and revenue models are designed to ensure self-sustainability through value generation over time.
Benefits of Marketplace:
Bima Sugam serves as an integrated online platform that consolidates the entire insurance ecosystem onto a single portal. This streamlined approach facilitates easier discovery, comparison, and purchase of insurance products, thereby enhancing transparency and accessibility for consumers.
India's Insurance Market:
India is poised to become the sixth largest insurance market globally by 2032. The life insurance sector, in particular, is anticipated to witness significant growth, with a projected compound annual growth rate (CAGR) of 12.5% from Rs 9.0 lakh crore in 2023 to Rs 14.5 lakh crore in 2027, in terms of gross written premiums.
By embracing technology and fostering collaboration, Bima Sugam represents a pivotal step towards realizing the vision of "Insurance for all by 2047," thereby catalyzing positive transformation within India's insurance landscape.