Have you heard of anyone disliking shopping? Rarely, right? However, when it comes to buying insurance policies – not so much. Many would agree that purchasing insurance is a cumbersome and complicated process.
It takes time to compare the host of insurance policies available and to zero in on the right policy providers.
And that’s not even half of the battle fought. The real struggle often starts after you’ve purchased the insurance policy. Claim settlements, renewals, and switching between service providers come with its own set of roadblocks.
However, in recognizing the problems policy buyers face, there’s a novel solution in the making.
Proposed by the Insurance Regulatory and Development Authority of India (IRDAI), ‘Bima Sugam’ could very well be the silver lining in the tumultuous world of insurance that policy buyers and holders have been waiting for.
It aims to serve as a one-stop shop for insurance and promises a host of interesting features. So, what exactly is ‘Bima Sugam’ and how will it work? Let’s find out all about it below:
What Is Bima Sugam?
Bima Sugam is designed to act as an online platform or marketplace for buying and selling all kinds of insurance products. It is backed by the IRDAI, the Life Insurance Council, and the General Insurance Council and is expected to disrupt the insurance sector in the near future.
The Amazon-like portal will list all life and general policies in one place. It will also allow users to purchase other types of insurance schemes, such as motor insurance and health insurance.
In addition to buying and selling insurance policies, the platform will also provide seamless servicing and claim settlement. All and all, Bima Sugam aims to achieve the IRDAI’s long-standing motive of dematerializing insurance policies and the allied processes that come with them.
How Will It Work?
Under the Bima Sugam, policyholders will each have an E-BIMA or E-IA account in a Demat format. The online accounts will require you to do the KYC at the time of opening only. You will not need to repeat the process at the time of the additional/new purchase and/or renewals of new/existing policies.
The online accounts will also serve as a repository of all the insurance policies that you hold. Further, it will provide links with UIDAI, CDSL, NSDL, etc as well.
The framework will eventually bring about end-to-end digitization of the insurance ecosystem and ensure easy access to data by listing all policy details and timelines in one place.
Bima Sugam will be accessible to insurance providers, agents, intermediaries, as well as customers.
Who Are The Stakeholders Of Bima Sugam?
The Insurance Regulatory and Development Authority of India will monitor this novel platform. For its seamless establishment and functioning, Bima Sugam will require approximately Rs. 85 crores as initial capital.
It will consist of the following shareholders who will each hold a differing stake in it:
If additional capital outlay is anticipated and/or required, the IRDAI could look at adding more stakeholders to the Bima Sugam in the future.
Benefits Of Bima Sugam
1. Reduced commissions
Bima Sugam might bring down the cost of insurance by reducing the commissions paid to intermediaries. However, insurance intermediaries will very much remain on board.
2. Process efficiencies
The onetime KYC process for opening e-IA accounts on the platform will ensure that this doesn’t have to be repeated each time while buying a new policy. Further, digitization will also help save time and make processes more efficient.
3. No loss of data
Even today, the insurance sector is not a paperless industry. It involves several physical copies that are in circulation from one hand to the other. Even online copies, loss and misplacement of policy documents and details are common. By bringing about an online repository in place, you can minimize the chances of such data loss.
4. Single window mechanism
The platform will provide a single window for hosting, sale, servicing, and claim settlements for all sorts of insurance policies. Users can raise service requests and even track the status of their requests online.
5. Rise of Insurtech
The promise of a centralized database and common API integration can prove to be a boon for players in the Insurtech and WealthTech markets. This could help create new jobs and boost the economy.
To The Future
The dematerialization of insurance policies was long overdue. With the introduction of the Bima Sugam, the IRDAI has taken a step in the right direction. The unique platform will increase customer convenience and even open doors for new start-ups in the Insurtech space.
Touted to be a game changer for the Insurance section, you can expected the Bima Sugam to go live by January 2023.