Understanding Bima Sugam: A Game Changer in the Insurance Sector

What is Bima Sugam?

Bima Sugam is an innovative online insurance marketplace developed to function as a comprehensive platform where customers can conveniently buy, manage, and settle claims for a variety of insurance policies. Often referred to as the “UPI moment for Insurance,” this initiative signifies a significant transformation in how insurance is accessed and managed in India.

Operational Timeline

The concept of Bima Sugam was conceptualized in 2022. The platform was recently launched at the IRDAI office, with a phased rollout anticipated early next fiscal year. The initial phase will involve onboarding web aggregators, followed by an extension to other distributors.

Benefits for Customers

Bima Sugam offers a multitude of advantages for customers, allowing them to:

• Compare, purchase, maintain, and claim insurance policies all on one platform.
• Access products with enhanced transparency, feasibility, and customization options.
• Reach previously underserved populations through improved access and inclusion.
• Benefit from a fee-based, rather than a commission-based service model, ensuring clear pricing.

Will Bima Sugam Replace Existing Distributors and Agents?

No, existing distributors and agents will continue to operate as usual. The primary goal of Bima Sugam is to enhance insurance penetration by reaching a broader audience rather than merely maximizing premium collection. Additionally, it aims to support current distributors by enhancing credibility through transparent information dissemination.

How is Bima Sugam Different from Current Aggregators?

In contrast to existing web aggregators, Bima Sugam:

• Represents an industry-wide initiative backed by high credibility and accountability.
• Focuses on simplicity, affordability, and transparency for customers.
• Allows web aggregators to continue operating within their own marketplaces, positioning Bima Sugam as a complementary platform rather than a competitor.

Role of IRDAI

The IRDAI will oversee the regulatory aspects of Bima Sugam, including issues related to data privacy. The regulator's role is crucial in ensuring that the platform upholds high standards while facilitating the growth of the insurance sector, which aims to become India's third-largest economy.

Implementation Challenges

Key challenges faced by Bima Sugam include:

• Simplification of insurance products to ensure they are user-friendly and accessible.
• Technology and infrastructure enhancements to guarantee smooth backend operations for products and services.
• Balancing the interests of existing players while fostering industry transformation.
• Reducing distribution costs and improving penetration, particularly in rural regions.

Public Sector Insurers’ Involvement

Yes, discussions have been held regarding potential conflicts of interest and the interests of public sector undertakings (PSUs). Business models are expected to evolve, with public insurers recognizing the necessity for adaptation to align with the platform’s objectives.

Impact on Insurance Penetration in India

Insurance penetration in India is currently low, with health insurance coverage reaching only about 35–40% of the population. Bima Sugam aims to increase penetration, especially in rural areas and Tier-II, III, and IV cities, where insurers have limited presence, thereby enhancing overall financial inclusion and awareness.