Exploring Bima Sugam: A UPI Moment for the Insurance Industry
In 2016, the Reserve Bank of India (RBI) introduced the Unified Payments Interface (UPI), a significant development in the digital finance industry. This initiative enabled the previously unbanked population to access banking services and conduct digital transactions, reducing their reliance on physical currency. Now, the Insurance Regulatory and Development Authority of India (IRDAI) has put forth a new platform called Bima Sugam, which aims to replicate the transformative impact of UPI in the insurance sector. This proposed platform has the potential to revolutionize the industry, similar to the UPI’s groundbreaking impact. Let’s delve into the details.
“The recent initiative of IRDAI Bima Sugam is considered to be a major change in the overall development of the insurance market. It is a revolutionary step that aims to become the largest online marketplace for insurance products and services not practiced anywhere in the world,” said Sanjiv Singh, Head, Marine & Specialty Lines, General Insurance Council in a press release.
“Based on India’s diversity and population size, it could prove to be quite a success and a model for other developing economies. It facilitates the convergence of all stakeholders and insurance services from one place, he added.
What is Bima Sugam
Bima Sugam is proposed as an online marketplace for insurance services. It is a one-stop digital platform similar to Amazon and offers many services including all kinds of (buying life, health and general insurance from different insurance companies, policy management, portability, switching) agents, claims settlement and more.
All of it is done through one portal in a paperless and digital format. Insurance companies, especially online ones, will become promoters of this platform. In addition, insurance companies will become significant stakeholders of the platform and will focus on providing customers with insurance services through an electronic insurance account (E-IA).
The platform also acts as a centralized database for all the needs of the insurance industry, which brings its own advantages. Insurance companies would not have to worry about maintaining their individual databases, and the entire hierarchy would be able to access data in their own domain to quickly assess the policyholder’s claim. This effectively speeds up the payment of claims and reduces the need for constant back-and-forth communication with representatives.
Another perceived benefit of this portal is the reduction of commissions paid to brokers and the improvement of their operational efficiency.
IRDAI has appointed a committee to create the portal and prepare it for implementation. The estimated start date could be June 2024. It should be noted that the project has already exceeded its original deadline of January 2023 and the extended deadline of August 2023.
