IRDAI proposes extension in sandbox norms

IRDAI has proposed to extend the validity of regulatory sandbox guidelines by two years as the proposals received under it require more time for completion.

To give a fillip to insurance penetration and facilitate innovations in the sector, especially those triggered by technology, the regulator had notified the IRDAI (Regulatory Sandbox) Regulations, 2019 on July 26, 2019. The regulations are scheduled to expire on July 25, 2021.

The Insurance Regulatory and Development Authority (IRDAI) invited applications for the first cohort of the regulatory sandbox from September 15, 2019 till October 14, 2019. A total of 173 applications were filed with it.

It announced the second cohort for one month starting from September 15, 2020 and received 185 applications.

In an exposure draft, the regulator said it was observed that most of the proposals could not be completed within a period of six months due to Covid-19. They were, therefore, granted extension by another six months to complete the experiment.

Regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of the testing.

The RS allows the regulator, innovators, financial service providers and customers to conduct field tests to collect evidence on the benefits and risks of new financial products and services.