Idra issues guidelines for insurtech

The insurance regulator of Bangladesh has finalised a framework enabling tech startups to innovate insurance policies, their distribution and other related tasks.

The move comes in a bid to enhance customer experience through digital platforms, streamlined claim management, and personalised policies.

The Insurance Development and Regulatory Authority (Idra) is set to issue the Insurance Development and Regulatory sandbox guidelines-2023. The Daily Star obtained a copy of the guidelines.

Under the sandbox, tech startups will be able to apply for developing insurance products, marketing the policy, providing settlement services, underwriting and other insurance facilities.

For that, the registered startup has to apply to the authority with an eligibility certificate from the Bangladesh Association of Software and Information Services (BASIS).

The startup will also have to sign a deal with an insurance company.

"We have introduced this sandbox to increase the use of IT in the insurance sector and foster innovation in the process," Mohammad Zainul Bari, chairman of the Idra, told The Daily Star yesterday.

"I think this step will encourage youths to bring innovation in the sector as well as increase insurance penetration," he added.

He said if IT or fintech firms can come up with an innovative insurance solution, the Idra could connect them with related insurance providers.

Tech entrepreneurs welcomed the step.

"We thank the Idra and its chairman for taking this big step. This is going to be a game changer for the country's insurance market," said AKM Fahim Mashroor, chairman of the BASIS standing committee on fintech and digital payment.

Bangladesh's insurance market is very underdeveloped as less than 3 percent of the country's population and local businesses are covered by any type of insurance.

"It [coverage] should reach over 10 percent like other neighbouring countries. Now that new innovative products can be offered by different tech platforms, we expect massive adoption of insurance products in the next three to five years," Mashroor said.

BASIS has been working closely with the Idra for developing the guideline of this sandbox, he added.

The insurance sector in other countries, including those in the sub-continent, have considerably higher market penetration with a much wider range of products compared to Bangladesh.

For example, there are more than 110 insurtech startups in India and 335 such companies in the Asia-Pacific region.

In Bangladesh, there are around 10 tech firms working with insurance companies to provide insurance solutions digitally or enable insurance through information technology.

"Now, tech companies will have a bigger role in developing products and services for the sector," Mashroor added.