Is Bima Sugam a ‘UPI moment’ for insurance sector

Is Bima Sugam a ‘UPI moment’ for insurance sector

Subject: Economy

Section: Monetary Policy

In News: IRDAI claims that the proposed Bima Sugam is a “game changer” and a “UPI moment” for the insurance segment.

Key Points:

• IRDAI claims that the proposed Bima Sugam is a “game changer” and a “UPI moment” for the insurance segment, with ambitions of becoming the largest online market for insurance products and services which has not been practiced anywhere in the world.
• Initially it will provide details about insurance schemes acting as an insurance repository initially. This will be followed by a listing of policies.
• The platform is likely to be implemented by June 2024.
• Identifying the right policy, buying it, settling the claims and renewals will be streamlined in an online process. The process will be mostly on the lines of demat accounts and online trading in the case of stock markets.

What will the platform ‘Bima Sugam’ offer?

• ’The proposed platform is expected to help customers identify the right scheme from hundreds of products and services, with reduced paperwork.
• It’s an online platform where customers can choose a suitable scheme from multiple options given by various companies.
• All insurance requirements, including those for life, health, and general insurance (including motor and travel) will be met by Bima Sugam.
• This platform will help in the settlement of claims, whether it’s health coverage or death claims, in a paperless manner on the basis of policy numbers.

How will it benefit customers?.

• The proposed platform would act as a single window for the policyholder to manage his/her insurance coverage.
• It will provide end-to-end solutions for customers’ insurance needs i.e., purchase, service, and settlement in a seamless manner.
• Commissions on policies are expected to come down, benefiting the customers. The cost of buying policies will come down.
• The paperwork involved in buying a policy will also come down.
• Settlement of claims and renewal of policies will also become faster.

How will it benefit insurance providers?

• It will facilitate insurance companies to access the validated and authentic data from various touch points on a real-time basis.
• The platform will interface for the intermediaries and agents to sell policies and provide services to policyholders, among others, and reduce paperwork.
• Will help in the penetration of insurance products in uncovered markets.

Who will own the platform?

• The overall budget for Bima Sugam has been hiked to Rs 200 crore from around Rs 85 crore. I
• RDAI has appointed a committee for the creation of the platform and now plans to go for requests for proposals (RFPs) soon to appoint a service provider for the platform. The service providers will be the technological partners for creating and running a platform to provide all the services in one place.
• Life insurance and general insurance companies will each own a 47.5 per cent stake, while brokers and agent bodies will own 2.5 per cent each.