IRDAI Drives Sweeping India Insurance Reforms: Bima Sugam Marketplace, Risk-Based Capital, Ind-AS

The Insurance Regulatory and Development Authority of India (IRDAI) is orchestrating one of the most ambitious modernisation drives in the global insurance industry, deploying a comprehensive set of structural reforms designed to expand coverage, reduce costs, and improve transparency across India's rapidly growing $146 billion insurance market. The reform agenda is anchored in the regulator's national mission of 'Insurance for All by 2047.'

The centrepiece is Bima Sugam — a digital insurance marketplace backed by ₹500 crore in capital and designed to function as the 'UPI of insurance,' a reference to India's transformative Unified Payments Interface. The non-profit, industry-owned platform allows customers to compare insurance products by price and service metrics, buy and renew policies, manage coverage, settle claims, and file grievances through a single interface. Initially, insurers list standardised policies in a transparent e-commerce-style format, with scope to expand to bundled and customised products over time. The Bima Sugam India Federation has completed incorporation, with the first commercial use case targeted for 2026.

Beyond the marketplace, IRDAI is preparing a discussion paper on establishing a Digital Public Infrastructure (DPI) for the insurance sector — a consent-based registry of policy and claims data backed by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which was passed in January 2026. The DPI would enable faster underwriting, improve fraud detection, and allow seamless portability of records, all in strict compliance with the Digital Personal Data Protection Act, 2023.

On the prudential side, IRDAI is transitioning to a dynamic Risk-Based Capital (RBC) framework, replacing the existing formula-based solvency regime — a move toward globally aligned, risk-sensitive capital standards. From the next financial year, insurers are expected to adopt Indian Accounting Standards (Ind-AS), aligning financial reporting with internationally recognised norms. IRDAI is also realigning commission structures to reward effort-based incentivisation — renewals and long-term customer retention — rather than front-loaded payouts, a change designed to curb mis-selling and reduce upfront acquisition costs.

The reforms build on a series of liberalising measures: FDI limits raised to 100%, the ability for insurers to launch new health and retail products without prior approval, relaxed solvency norms freeing capital for deployment, and the elimination of GST on selected individual insurance products (term, ULIP, endowment, and health) effective September 2025. The five specialised IRDAI working groups covering wellness incentives, premium pricing models, and hospital grading protocols are mandated to deliver actionable reports within two to six months, signalling an aggressive implementation timeline through late 2026.