The Central Insurance company of Iran (CII) says it has received a license from the Ministry of Economy to launch a regulatory sandbox.
Ali Bonyadi, the CII deputy for planning and development, made the announcement on Sunday. "Fortunately, in collaboration of the Economy Ministry, the establishment of a regulatory sandbox in the insurance industry has been approved".
Aa a first step, the regulatory sandbox will commence its activities through the website of the Task Force for Sandboxes Management and Coordination at the Ministry of Economic Affairs and Finance.
A regulatory sandbox is a controlled environment supervised by a public authority in which startups and incumbents are allowed to test innovative products and services and face less risk of penalty for non-compliance with the regulation in exchange for certain safeguards – such as accepting a limited number of clients or intermediating limited transactions.
A key objective of the sandbox is to foster innovation by facilitating access of fintechs to funds in their initial stages. As fintechs offer new products in a highly uncertain regulatory climate, they face serious challenges of asymmetric information and often struggle to raise capital to develop products and grow.
"One of the important responsibilities of the regulatory authority is to guide insurance and develop insurance culture in the country. This can be achieved by utilizing innovative technologies in designing new products based on the needs of the society."
Bonyadi emphasized the role and significance of technology development and innovation in the key insurance industry.
"The CII had plans to create a secure testing environment for insurance regulation and contribute to fostering technological development, deregulation and draw on innovative capacity."
The official noted the activity and role of the insurance sandboxes, saying, "Regulatory sandboxes have proved their value in financial institutions such as banks, stock exchanges, and insurance companies, which actually serve as facilitators for businesses based on innovative technology that do not comply with existing laws and regulations.”
“Testing environments allow emerging technology entities to grow their functions within the sandboxes, subjecting their behavior to regulatory scrutiny, and modify regulations and laws that hinder their development."
The Security and Exchange Organization, the capital market regulator, and the Central Bank of Iran last year unveiled regulatory sandboxes to help ease the growth of third-party platforms.
Hundreds of startups and knowledge-based companies have opened in Iran and some offer insurance services. They account for almost 96% of the total online sales and are recognized as knowledge enterprises by the government with an estimated 5-trillion-rial investment.
