Insurance Regulatory and Development Authority of India vide Notification No. F. No. IRDAI/Reg/5/212/2025 issued Insurance Regulatory and Development Authority of India (Regulatory Sandbox) Regulations, 2025, effective from 3^rd January, 2025.

“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.

Regulation is applicable to,

1. an insurer or
2. an intermediary or insurance intermediary or
3. any person other than an individual having a minimum net-worth as specified by the Competent Authority or
4. any other person specified by the Competent Authority seeking singly or jointly permission for promoting innovation in insurance in India.

The objectives of these Regulations are:

1. To facilitate innovation in the insurance sector while ensuring orderly development of the insurance sector and protection of interests of the policyholders.
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 necessary during the experiment period.

Approval compliances to be obtained from Authority are:-

1. Applicant to obtain approval from Authority prior to promoting/ implementing innovation in insurance in India across the insurance value chain and in any area that requires relaxation of any provision of the Regulations, Notification, Master Circular, Guidelines, Circular or any other communication issued by the Authority except for areas involving prudential and financial condition/stability matters such as capital, liquidity etc.
2. Applicant to apply to Authority for seeking extension of time citing the reasons for seeking the extension along with a performance analysis of the proposal regarding innovation in insurance at the end of experimental period.
3. Applicant to apply to Authority at least one month in advance for early termination of proposal.

Intimations compliances to be given to the Authority:-

1. Applicant to submit report as to meeting of objectives of proposal along with policyholders feedback/other information/details as specified and plan of action to be taken to bring the proposal under extant regulatory framework within 30 days of completion of allocated time period to Authority.
2. Applicant to notify immediately any deviation in execution of proposal to the Authority.

Other compliances which needs attention of the Applicant:-

1. Applicant to ensure innovation to be beneficial to insurance sector in India, in interest of policyholders, conducive to growth of industry, promote insurance penetration, to bring in efficiency and promotes ease of doing insurance business prior to obtain permission for promoting/implementing innovation in insurance in India.
2. Liability of applicant for customer/ business risks arising during experimentation/test phase of regulatory sandbox.
3. Responsibility of applicant for every action taken in respect of the proposal and be liable to discharge all the obligations thereunder including any legal obligations.
4. Responsibility of applicant to erase personal data of participants on completion of processes under proposal.
5. Responsibility of applicant to maintain confidentiality of policyholder data after grant of permission to promote/ implement innovation in insurance in India.

Penal Provisions:-

The Competent Authority may revoke the permission so granted at any time, if it is of the view that the activities carried out are not meeting the conditions for grant of promotion or implementation of innovation in insurance in India or in violation of the provisions of the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999 or other applicable laws. The provision relating to revocation of permission shall apply mutatis mutandis for the extension period.

Note:- Insurance Regulatory and Development Authority of India (Regulatory Sandbox) Regulations, 2019 shall stand repealed from the date of these Regulations coming into force.

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CS Archana Gupta