In exercise of the
powers conferred by clause (zd) of sub-section 2 of Section 114A of
the Insurance Act, 1938 (4 of 1938) read with Section 14(2)(e) and 26 of
the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the
Authority, in consultation with the Insurance Advisory Committee, hereby makes
the following Regulations, namely: - (1) These Regulations may
be called the Insurance Regulatory and Development Authority of India
(Regulatory Sandbox) Regulations, 2019. (2) These Regulations
shall come into force on the date of their publication in the Official Gazette. (3) These Regulations
shall remain in force for a period of [1][4
years] from the date of publication in the Official Gazette. The objectives of
these Regulations are: (1) To strike a balance
between orderly development of insurance sector on one hand and protection of
interests of policyholders on the other, while at the same time facilitating
innovation; (2) To facilitate
creation of regulatory sandbox environment and to relax such provisions of any
existing Regulations framed by the Authority for a limited scope and limited
duration, if such a relaxation is needed. (1) In these Regulations,
unless the context otherwise requires: - (a) "Act" means
the Insurance Act, 1938; (b) "Applicant"
includes (i) an insurer or (ii) an intermediary or insurance
intermediary or (iii) any person other than
an individual having a minimum net-worth of ten lakhs rupees for previous
financial year or (iv) any other person
recognized by the Authority seeking singly or
jointly permission for promoting innovation in insurance in India; (c) "Authority"
means the Insurance Regulatory and Development Authority of India established
under sub-section (1) of Section 3 of the Insurance Regulatory and
Development Authority Act, 1999 (41 of 1999); (d) "Regulations"
means the Regulations framed by the Authority as defined under Section 2
(16A) of the Act; (e) "Regulatory
Sandbox" means an environment used in the financial services sector, which
provides testing ground for new business models, processes and applications
that may not necessarily be covered fully by or are not fully compliant with
existing Regulations; (f) "Sandbox
environment" means a testing environment designed for experimentation for
a specific period of time. (2) Words and expressions
used and not defined in these Regulations but defined in the Insurance Act,
1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act,
1999 (41 of 1999) or the Rules or the Regulations notified there under, shall
have the meanings respectively assigned to them in those Acts or the Rules or
the Regulations as the case may be. CHAPTER II PROCEDURE FOR
SEEKING PERMISSION FOR PROMOTING INNOVATION IN INSURANCE IN INDIA (1)
An
applicant may apply to the Authority seeking permission for promoting or implementing
innovation in insurance in India in any one or more of the following
categories: (a)
Insurance
Solicitation or Distribution (b)
Insurance
Products (c)
Underwriting (d)
Policy
and Claims Servicing (e)
Any
other category recognised by the Authority. (1)
An
applicant desiring to promote or implement innovation in insurance in India
shall make an application to the Authority electronically in the specified
form. (2)
The
application shall be accompanied by a non-refundable processing fee of ten
thousand rupees. (3)
The
Authority shall follow the cohort approach in inviting applications for
promoting innovation in insurance sector under the Regulatory Sandbox approach. Explanation: For the purpose of these
Regulations "cohort" means applications received from applicants
during a specified period of time to be announced. (1)
The
Chairperson of the Authority, on being satisfied that the application: (a)
promotes
innovation beneficial to insurance in India; (b)
is
in the interest of the policyholders; (c)
is
conducive for the orderly growth of the industry; (d)
would
promote increase in insurance penetration in the country; (e)
meets
any other requirements as specified by the Authority, may grant permission subject to the applicant
complying with the relevant provisions of the Insurance Act, 1938 and the
Insurance Regulatory and Development Authority Act, 1999. (2)
The
permission granted shall be valid for a period of 6 months. (1)
The
Chairperson of the Authority may revoke the permission so granted at any time,
if it is of the view that the activities carried out are: (a)
not
meeting the conditions given in Regulation 6 above or (b)
in
violation of the provisions of the Insurance Act, 1938, the Insurance
Regulatory and Development Authority Act, 1999 and other applicable laws. Provided that before revoking the permission,
the applicant shall be given an opportunity of being heard. (1)
If,
at the end of 6 months, the applicant seeks extension of time, a request may be
made to the Authority citing the reasons for seeking the extension along with a
performance analysis of the proposal so far. (2)
The
Chairperson of the Authority may consider the request of the applicant on
merits. (3)
Under
no circumstances will the applicant be granted extension of time beyond 6
months to complete the task. (4)
The
clause relating to revocation of permission as mentioned in Regulation 7 shall
apply mutatis mutandis for the extension period. (1)
After
grant of permission, the applicant shall ensure: (a)
that
the integrity of the systems is maintained at all times. (b)
confidentiality
of policyholder data is maintained. (c)
adequate
internal mechanisms are put in place for reviewing, monitoring and evaluating
its controls, systems, procedures and safeguards. (2)
Where
any deviation is noticed in executing the proposal, the applicant shall notify
the same immediately to the Authority. (1)
The
Authority, through the single point of contact (SPOC), shall review the
progress of the proposal at regular intervals. (2)
The
Authority may also guide the applicant in the form of suggestions and in any
other way as it may deem fit. However, the applicant shall be solely
responsible for every action taken in respect of the proposal and shall be
liable to discharge all the obligations thereunder including any legal
obligations. (1)
On
completion of the allocated time period or size of the proposal specified, the
applicant shall submit a report to the Authority within 15 days on how the
proposal met the objectives along with feedback from the policyholders and such
other information or details as specified by the Authority. The applicant shall
also submit a plan of action as to how the proposal be brought under the extant
regulatory framework. (2)
On
examining the report of the applicant, if the Authority is satisfied that the
objectives of the proposal have been met, it may accord permission to the
applicant to adopt the proposal under the extant regulatory framework wherein
in addition to provisions of the Insurance Act, 1938, the Insurance Regulatory
and Development Authority Act, 1999, all Regulations, guidelines, circulars,
etc. will be applicable from the date of moving to the extant regulatory
framework. (3)
On
examining the report submitted by the applicant, if the Chairperson of the
Authority is of the view that the objectives of the proposal are not met, the
applicant may be directed to discontinue the proposal. (4)
An
applicant may also file for early termination of the proposal in case it is
felt that the proposal shall not be able to meet the desired objective. The
Chairperson of the Authority shall consider the request on merits and advise
the applicant accordingly subject to such conditions as it deems fit. (5)
It
shall be the duty of the applicant to erase all personal data of the
participants and give a confirmation to that effect to the Authority. (6)
The
decision of the Chairperson of the Authority on whether or not to allow
continuation of the proposal is final. (1)
The
Chairperson of the Authority may relax for the applicant the applicability of
one or more provisions of any Regulation(s) notified by the Authority or any
guidelines or circulars issued by the Authority, subject to the conditions
mentioned in Regulation 6 and any other conditions as deemed necessary. (2)
However,
no relaxation shall be offered in respect of compliance with the Insurance Act,
1938 or IRDA Act, 1999 or any other applicable statutes. (3)
The
maximum period for which the relaxation shall be granted is one year. (1)
The
Authority shall have the right to call for, inspect or look into any document,
record or communication from the applicant. (2)
Notwithstanding
the above, where the Authority is of the opinion that the operations of the
applicant are not in the interest of the Indian market or the insurance
policyholders, the Authority reserves the right to take appropriate actions
including suspension or cancellation of permission granted. (3)
The
Chairperson of the Authority may issue Guidelines on matters relating to
operational issues pertaining to the Regulatory Sandbox, and such other
relevant matters as deemed appropriate. [1]
Substituted by
Insurance Regulatory and Development Authority of India (Regulatory Sandbox)
(Amendment) Regulations, 2021 vide Notification No. IRDAI/Reg/3/175/2021 dated
07.04.2021, for the following:- "2 years"INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY OF INDIA (REGULATORY SANDBOX) REGULATIONS, 2019
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