Page 39 - Insurance Times March 2023

rates within the reinsurance treaty agreements for the risks
The Standardization of General Insurance
commencing on and after April 1, 2023. This attempt of the
Products: regulator again puts the Insurer in suicidal competition and
Sustainable growth in the insurance industry primarily relies the treaty arrangement with the national reinsurer becomes
on consumers making informed choices by picking the right a very tight job.
insurance products. But in many scenarios, consumers do
face trouble in understanding the product rightly. The The business of the GIC Re is expected to be impacted in the
standardization of insurance products will make it easier for coming years as the sectoral regulator scrapped the `burning
consumers to select the products correctly and suitably as cost` model of pricing by reinsurers. The policyholders were
per the best requirements of the clients. being led to believe that the burning cost released by IIB is a
minimum mandated rate. Thus the buring cost model gave
One of the most promising solutions that the regulator has to the insurer a feeling of Tariff like atmosphere and suddenly
introduced is the Standardisation of Insurance products. With there was revamping of the same which again gave a
this move of standardising complex insurance policies, IRDAI detariffing scenario in the market for all the players.
has enhanced consumer buying in today's time. The health
insurance penetration in India got a boast with the The revamp of testing time under Sand
introduction of Arogya Sanjeevani policy which is a standard
Box regime in General Insurance Market:
product in the health line of business.
The initiatives of Sand Box will help in furthering the goal of
There are several new standard insurance products under insurance penetration and reaching out to more and more
the same lines are namely Corona Rakshak, Corona Kavach, people in the country. The Regulatory sandbox refers to live
Saral Jeevan Bima and Standard Personal Accident Cover etc. testing of new products or services in a controlled regulatory
The dismantling of the Standard Fire products associated with environment. It acts as a "safe space" for business as the
the erstwhile Fire tariff and the introduction of three standard regulators may or may not permit certain relaxations for the
limited purpose of testing. Regulatory sandboxes enable in a
products under Fire line of business such as Bharat Griha
real-life environment the testing of innovative technologies,
Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu
products, services or approaches, which are not fully
Udyam Suraksha. Has also brought about a revolution in the
compliant with the existing legal and regulatory framework.
General Insurance market.
They are operated for a limited time period of 6 months and
The regulator has introduced Policy seekers do resolve
challenges in several scenarios be it while comparing products now the same stands revised to 36 months or 3 years. One of
the major challenge was that the applicants under the
or while making a choice from the plethora of options available
regulatory sandbox mechanism could apply through cohorts.
in the market. Often these difficulties end up with customers
By this move the Insuretech companies and the insurers with
having to delay their buying decisions. During such situations,
providing clear, transparent information to the consumers is a passion to grow through technology mode will be the one
of utmost priority. Simplifying the available options can turn marching ahead in the competitive system. The sandbox
out to be an excellent attempt to enhance the trust between mechanism will nurture the niche players those who have
consumers and the insurance eco-system. the technology backbone and insurtech and have motive to
cater to those areas which are still unserved in the country.
The Scrapping of Burning Cost model of
Pricing:
The State Insurance Plan- Insurance for
There was time when it was decided to accept Insurance as
All:
well as reinsurance placement only for clients where the risk
Proliferation of insurance in every nook and corner of the
was priced at premium rate on burning cost basis as arrived
country by focusing on each state/UT is the primary objective
by IIB. In simple, the burning cost rate is arrived at by dividing
of the Regulator under the same project and aims towards
claims paid by sum insured. Now the Insurance Regulatory
Insurance for All.
and Development Authority of India (IRDAI) has advised all
non-life insurers and reinsurers to ensure that the Insurance
Information Bureau (IIB) published premium rates for fire The proposed State Insurance Plan is intended to accelerate
and engineering policies are not embedded as the minimum last mile delivery of insurance services while utilizing the

The Insurance Times March 2023 33