The Insurance Regulatory and Development Authority of India (IRDAI) has recently given its approval to ‘Bima Sugam’. The insurance regulator has asked insurance companies to operationalise it by January 2023.

It’s an Amazon-like platform where all life and general insurance policies will be listed. Bima Sugam will be responsible for sales, servicing and claims coming from these insurance policies.

Speaking in an interview with CNBC-TV18, Suresh Ganapathy, Banking Analyst at Macquarie Capital Securities said that Bima Sugam could be the Unified Payments Interface (UPI) moment for the insurance sector.

“Bima Sugam is a fantastic concept but it depends upon how the ecosystem develops. You are talking about the entire value chain being taken through Bima Sugam right from origination, settlement of claims and processing and everything you can do through the portal. Therefore, this could be the UPI moment for the insurance sector. It can only expand the market,” he said.

Also Read | 'Bima Sugam' to be a game changer, need to create it at earliest: IRDAI Chief

However, Ganapathy added that some business models can be at risk because of Bima Sugam.

“The intermediaries who are doing this business could be at risk in case Bima Sugam does well. This is what happened to the payments business once UPI came in,” he said.

According to him, the revised IRDAI paper is giving a greater degree of flexibility.

IRDAI has recently released a revised consultation paper on the expense of management and commission. According to this, the regulator has done away with the specific caps on commissions to agents and intermediaries that were earlier proposed in August.

“Getting away with product caps and going with an overall uninsured motorist (UM) limit is giving a greater degree of flexibility to the insurance companies,” Ganapathy said.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com's blog

(Edited by : Anshul)