Bima Sugam to Go Live in 4 to 6 Weeks, With Fees Capped at 5%
Bima Sugam is set to introduce a digital platform for insurance transactions, with a proposed fee cap of 5% aimed at keeping costs in check for insurers and customers.
Bima Sugam is expected to go live in the next four to six weeks, with platform fees capped at 5%, marking a key step towards simplifying insurance access in India.
NEW DELHI – Bima Sugam, the regulator-backed digital insurance marketplace, should become operational in about a month to six weeks, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Ajay Seth said at the Business Standard BFSI Insight Summit on October 27. The fee charged on the platform, he said, should not exceed 5 per cent of the premium.
Motor insurance will be the first product on the platform. Seth said he would have expected it to be launched six months ago, and that the sooner it goes live, the better.
Bima Sugam: Why it is expected to be cheaper
Seth described Bima Sugam as a neutral platform where customers can compare prices, understand simple products and buy insurance directly, at a lower cost than through other distribution channels.
The saving, in the regulator’s framing, comes from distribution cost. Insurers still set their own premiums, but a platform that charges a capped fee does not need to survive on high commissions, which Seth had said earlier would let customers get a good product at much lower cost. Policies bought through intermediaries today carry commissions built into the premium.
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Bima Sugam: Why motor, and what is still pending
Seth said certain issues in motor insurance need to be addressed first, including changes to the regulatory framework following court judgments. Motor products are standardised and easier to compare online, which is why the platform starts there. Health and term life are expected to follow.
Bima Sugam: A platform that has slipped repeatedly
Bima Sugam has missed several targets. Earlier dates included January 2023, August 2023, June 2024 and April 2025. On June 30 this year Seth said the platform was behind schedule but that initial motor, health and term products should be available by the end of September. That date has now passed, and the new window is a month to six weeks. The platform is run by the Bima Sugam India Federation, whose shareholders are life, general and health insurers.
Bima Sugam: Other points from the session
Seth said insurance needs to grow 1.5 to 2 times as fast as the economy for 10 to 15 years, that health insurance is now a pull product but still generates the most complaints, and that the next focus for IRDAI is the claims experience. He also said penetration is the wrong lens and coverage should be measured by lives covered and effective cover per rupee spent.
Bima Sugam: What to watch
Whether insurers’ integrations are ready, how motor premiums on Bima Sugam compare with other channels, how aggregators and brokers respond to a 5 per cent fee cap, and whether the court-judgment issues in motor are resolved in time.
