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Context

• The Insurance Regulatory and Development Authority of India (IRDAI) has approved eight principle-based regulations including the much-awaited Bima Sugam marketplace.

Bima Sugam Marketplace Approval

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• IRDAI has recently approved eight principle-based regulations, including the highly anticipated Bima Sugam marketplace. This marketplace aims to revolutionize the insurance sector by establishing a digital public infrastructure known as Bima Sugam.
• The primary objective is to promote the universalization and democratization of insurance, ensuring the empowerment and protection of policyholders' interests. The overarching vision is to achieve "Insurance for all by 2047," aligning with broader national development goals.

Objectives of Bima Sugam Marketplace:

• Establish a digital platform for insurance transactions.
• Enhance accessibility and affordability of insurance products.
• Empower policyholders through transparent and efficient processes.
• Safeguard policyholders' interests and promote financial inclusion.

Overview of Regulatory Changes

In addition to the Bima Sugam marketplace, IRDAI has introduced significant regulatory changes across various domains within the insurance sector.

• Rural Obligations: The unit of measurement for rural obligations has been revised to the gram panchayat level, aiming to improve the assessment and implementation of rural insurance initiatives.
• Extension of Social Sector Coverage: The scope of the social sector has been expanded to include cardholders and beneficiaries under various government schemes. This expansion aims to widen the reach of social security nets and ensure comprehensive coverage for vulnerable populations.
• Motor Third-Party Insurance: Regulatory changes in motor third-party insurance focus on the unit of measurement, emphasizing the renewal of coverage for goods and passenger-carrying vehicles, including tractors. This approach aims to streamline insurance processes and enhance compliance within the motor insurance segment.

Key Regulations Cleared by IRDAI

IRDAI (Corporate Governance for Insurers) Regulations, 2024:

• These regulations aim to establish a robust governance framework for insurers, defining clear roles and responsibilities for the board and management.
• By formalizing governance aspects into regulations, IRDAI underscores the critical role of governance in ensuring the effective functioning and integrity of insurance companies.

IRDAI (Insurance Products) Regulations, 2024:

• This regulatory framework consolidates six existing regulations into a unified framework.
• The objective is to enable insurers to respond promptly to evolving market demands, streamline business operations, and enhance insurance penetration across diverse segments.

IRDAI (Registration and Operations of Foreign Reinsurers Branches & Lloyd’s India) Regulations, 2024:

• These regulations consolidate existing regulations governing the registration and operations of foreign reinsurers and Lloyd’s India.
• The aim is to foster the systematic development of the reinsurance sector in India, promoting orderly growth and aligning regulatory frameworks with international standards.

Conclusion

• IRDAI's approval of principle-based regulations signifies a significant milestone in the evolution of the Indian insurance sector.
• By introducing the Bima Sugam marketplace and other regulatory changes, IRDAI demonstrates its commitment to fostering innovation, enhancing governance standards, and promoting financial inclusion.
• These initiatives are poised to transform the insurance landscape, making insurance more accessible, transparent, and responsive to the evolving needs of policyholders and the broader economy.
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ALL ABOUT IRDAI: https://www.iasgyan.in/daily-current-affairs/insurance-regulatory-and-development-authority-of-india#:~:text=About%3A%20The%20Insurance%20Regulatory%20and,re%2Dinsurance%20industries%20in%20India.

PRELIMS QUESTION Q.  Which ministry does the Insurance Regulatory and Development Authority of India (IRDAI) fall under? A) Ministry of Home Affairs B) Ministry of Finance C) Ministry of Corporate Affairs D) Ministry of Commerce and Industry Correct answer: B) Ministry of Finance