IDRA amends regulatory sandbox guidelines

Staff Correspondent: The Insurance Development and Regulatory Authority (IDRA) has amended its Regulatory Sandbox Guidelines, introducing 13 major revisions to align the framework with evolving technological and market realities.

In a circular issued on Sunday (March 1), the regulator announced necessary additions, amendments and refinements to the guidelines originally formulated in 2023. The updated guidelines have taken effect immediately from the date of issuance.

IDRA said the revisions were made to ensure the framework remains relevant in light of technological advancements and changing industry dynamics. The amendments were enacted under Section 15(p) of the Insurance Development and Regulatory Authority Act, 2010, and in accordance with Clause 18 of the existing guidelines.

Key amendments

Replacement of the introduction:

The opening section has been revised to emphasise the growing importance of information technology, artificial intelligence (AI), big data and innovation in the insurance sector.

Revised definition of ‘Regulatory Sandbox’ (Clause 3(3)):

The definition has been updated to clearly explain the opportunity for testing innovative insurance products or services in a controlled regulatory environment.

Amendment to Clause 4(b):

Insurtech, startup and fintech companies will now be permitted to conduct sandbox activities under contractual arrangements with licensed insurers.

Replacement of Clause 5 – Scope of application:

The revised clause allows applications for innovation in insurance product development, marketing (including e-commerce), claims settlement, underwriting and other designated support services.

Replacement of Clause 6 – Eligibility criteria:

Only entities registered in Bangladesh with recognised success in technological innovation or application will be eligible to apply.

Amendment to Clause 7:

Provisions relating to the application process and required documentation have been updated.

Amendment to Clause 8:

The authority’s evaluation framework and approval structure for experimental operations have been refined.

Amendment to Clause 9:

The conditions governing experimental operations have been clarified.

Amendment to Clause 10:

The obligations and responsibilities imposed on approved entities have been updated.

Replacement of Clause 11 – Duration of approval:

Initial approval under the sandbox framework will remain valid for three years.

Replacement of Clause 12 – Renewal of approval:

Upon completion of the initial term, approval may be renewed annually based on performance evaluation.

Replacement of Clause 14 – Data preservation and reporting:

Approved entities must submit quarterly progress reports, a six-month interim report and a final report within 30 days after completion of the testing period. Clear instructions have also been issued to ensure data confidentiality and security.

Replacement of Clause 15 – Internal controls:

Entities must maintain system integrity, protect customer data confidentiality and ensure effective internal control mechanisms.

The updated Regulatory Sandbox Guidelines are available on IDRA’s official website.