Bima Sugam, and the platform a regulator builds when the market won’t.
On the insurance industry’s reluctance to commoditise itself, and the regulator that decided to commoditise it anyway.
There is a particular kind of project that arrives in a regulator's annual report, lingers for two or three reporting cycles, and then either ships or quietly dies. Bima Sugam, the Insurance Regulatory and Development Authority of India's proposed digital marketplace for insurance, has been in the third or fourth such cycle now. Its design has been announced, its launch dates have been adjusted, its consortium has been formed and re-formed, and the country still does not have it. This is, in a sense, the project working as intended.
The argument for Bima Sugam is a thin one to make and a hard one to disagree with. The retail insurance market in India is structurally bad at price discovery. Quotes are gathered through aggregator websites, distributor networks, agent visits, and bank channels — all of which extract a margin, and most of which do not present comparable products comparably. A buyer of term insurance, the simplest product in the catalogue, will receive different prices for the same coverage from the same insurer through three different intermediaries. The mathematics is unflattering to everyone involved.
What the platform proposes
Bima Sugam proposes to solve this by being a single, regulator-sponsored platform on which every insurer must publish every product at a uniform price, and on which any intermediary may transact. The buyer types a few facts about himself, sees a comparison, and buys. The intermediary's role becomes service rather than gatekeeping. The insurer's pricing becomes legible.
The insurance industry's complaint about Bima Sugam is, on inspection, an industry's complaint about being seen.
The industry's objection has been principled in form and protective in substance. The principled form: a regulator should not be in the business of building market infrastructure. The protective substance: a market on which prices are visible side-by-side is a market on which the higher-priced product disappears. Both are accurate. Both have been heard.
The likely shape of the launch
What Bima Sugam will eventually launch as is anyone's guess. The most likely outcome is the regulatory equivalent of a compromise: a platform that exists, that lists most products, that does not quite replace the existing distribution channels, and that gradually changes their economics by being there. Bima Sugam will not be a victory for the regulator. It will be a slow, uneven settling of a market into a shape it would not have chosen. Most regulatory projects worth doing end this way.