This PowerPoint discovers Indian Insurtech Industry and explores the benefits and pitfalls of Insrtech vis-a-vis traditional Insurance. This study further explores Indian Insurance Regulator IRDAI's attempts to promote this new tech trend and highlights the defects therein. Find the research mentioned at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3799576 (The Rise of Insurtech: The Ups and Downs of New Tech Trend)

1. INSURTECH &
DIGITAL
INNOVATION
FOR INSURANCE
The Innovative and Regulatory
Challenges
Prakhar Harit
Pra_k_har@hotmail.com

2. Insurance Regime in India
Introduction to InsurTech
The data network
The pits of Insurtech
Regulatory Challenges
STRUCTURE

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INSURANCE REGIME IN INDIA
Lack of participation in rural
sector:
• Affordability is an issue
90% of the workforce is in
the informal sector with no
minimum wages or any kind
of social security and with
very low disposable income
• People remain negligent
• Trust factor
• Lack of sufficient capital
• People are not willing to invest
in insurance company
Statista 2021

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THEAD GAME
4
“ab to karwa lo insurance…”

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“The most imminent effects of disruption will be felt in the banking sector;
However, the greatest impact of disruption is likely to be felt in the insurance
sector”
(The future of financial services, World Economic Forum 2015 )
93% of Insurance CEOs see the
speed of technological change as a
threat (compared to 69% in 2016)
*PWC2017InsuranceCEOSurvey

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We can define the Insurtech as a set of innovative business models,
platforms that bring in a new customer experience by applying
innovative technologies in the insurance world
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DEFININGINSURTECH

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SECTION DIVIDER
OPTION 2
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amet, consectetur
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THEGROWTHSTORY

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THE DIFFERENT SEGMENTS OF INSURTECHS
8
DISCOVER EXPLORE SELECT
PRODUCT
APPLY APPROVE &
UNDERWRITE
SERVICE &
ENGAGEMENT
CLAIMS
Changing needs
and triggers
Research &
Education
New risks Online & mobile Automation Instant Gratification Digitization &
automation of the
process
Influencers on
the buying
decision
Comparison
platform and
aggregators
Emerging
Products
Digitized and
Automated
Personalized use of
3rd party data
Providing personalized
information
New Protection:
o Shift from
claim to
protection
o Insurance as
a service
Untraditional
providers
Financial and
Robo Advisors
Personalisation
and use of 3rd
part data
Simplified and
Personalized use of
3rd party data
Disruptive
technologies
impacting the
insurance business
model
Iterative and predictive
customer service and
support

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THE KEY TO DATA
INSURTECH
DATA
ARTIFICIAL
INTELLLIGENCE
MACHINE
LEARNING
INTERNET
OF
THINGS
SMARTPHONE
APPS
BIG DATA
DRONES
BLOCKCHAIN
o Collecting Data
o Sorting the Information
o Optimize risk
o Systemising unstructured data
o Recognizing pattern
o Identifying fraud detection
o Understanding risk
profile
o Make out issues quickly
o Providing best service to customers
o Improved customer engagement
o Better understand customers
o Create predictive models
o Collecting accurate data
o Support an underwriting
inspection
o Claims adjustment process
o Offer features like security
o Large amount of data
o Third party transaction
o Smart Contracts

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CUSTOMER CENTRIC APPROACH
Benefits for Insurers
Help
Pricing
Premiums
Prevent and
Reduce
Fraud, and
Waste
Self-
Servicing of
Policies
Tailor made
products
Enduring
customer
relationships
Promoting
better
customer
outcomes
improved
risk control
and risk
assessment
Benefits
for
Customers

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THREATS
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11
Wde array of factors
Those may undermine
fairness and create
discriminatory factors
May also increase the
insurance costs for the
customer
Gathering ‘Relevant
Information’ through social
media
Association Bedge des
Consommateurs Test-Achats
(ASBL Case) (Case number
= C-236/09)
PREJUDICE IN
APPLYING DATA
Requirement of mass data to
train AI
Sampling or algorithm
errors can also affect the
accuracy.
Algorithm may also fail to
accurately identify a
fraudulent claim
ACCURACY OF DATA
Any company, directly or
indirectly connected to
internet, are always at brink
of being cyber attacked
InsurTech should prepare
for a heightened risk of
cyber-attacks
A.CYBER-SECURITY
No case of fraud being
conducted through InsurTech
platforms by assured.
But technological
development is a double-
edged sword.
Fraudsters can anytime find
new technology-enabled ways
to commit insurance fraud
FRAUD AND
MISCONDUCT

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REGULATORY RESPONSE
The Idea of Sandbox
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A Regulatory Sandbox…
• Is a space for testing of new ideas in a live environment with regulatory permission
• Brings down the cost of innovation and generates insights into regulatory work
• Is one among other regulatory tools…

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SUCH IDEAS HELPS …
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INSURTECH SANDBOXCOMMITTEERECOMMENDATION
14
Under this regulation, IRDAI set out principles that should be followed while formulating
regulatory sandbox framework.
The committee gave 15 key recommendations, which broadly included:
1. For testing products or services which promotes innovation and pose challenges to
existing regulatory framework.
2. special exemptions from existing regulatory framework be given to these
3. Constitution of Separate Committee
4. Entry and eligibility criteria, boundary conditions, timeliness and success parameters
be properly defined along with proper risk management controls
5. Inform their customers about such involvement and such entities be made liable for
any loss such customer policyholder incurs during the testing phase.

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IRDAI (REGULATORY SANDBOX) REGULATIONS, 2019
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•Insurers;
•Insurance intermediaries
•Any person (except individual)
(net worth Rs. 1 million in PY)
•Any other person IRDAI
recognises
Applicants
(Reg. 3(b))
•FORM–RG-1
•To be filled by:
•insurance solicitation or distribution;
•insurance products;
•underwriting;
•policy and claims servicing; or
•any other category IRDAI recognizes
Application process
(Reg. 4(1)) •Applicant promotes:
•innovation in Insurance
•interest of policyholders
• industry's orderly growth
•increase in insurance penetration in
India
•any other requirements specified by
the IRDA
Conditions
(Reg. 6)
•Permission is granted for 6 months
•Customer exceeds 10,000
•Total collection of premium is ₹5
Millions
•Any other parameter set by IRDAI.
Conclusion
(Reg. 11)
Upon conclusion, The IRDAI will review the report and:
1. Permit the applicant to adopt the application under the existing applicable statutory and regulatory
insurance framework (without any relaxations);
or
2. Direct the applicant to discontinue the application. (Reg. 11)

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IRDAI (REGULATORY SANDBOX) REGULATIONS, 2019
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• Upon framing of regulation, IRDAI tried to conceptualized the principles set out by the Sandbox committee
• However, the committee overlooked few principles which might not help in promoting innovation much.
Where
did
regulation
failed?
Exclusion of individuals from participating in Sandbox
Vague defintion of Regulatory Sandbox
Eligibility Requirements
Eligibility Requirements
No Policy on handling data

17. THANK YOU
WOODGROVE
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Prepared by:
Prakhar Harit
Email:
pra_k_har@hotmail.com
Read my detailed research on InsurTech and Indian regulatory regime. Available on
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3799576