Why in the News?

• IRDAI has released a consultation paper on a Public Insurance Registry (PIR), which is being described as having the potential to spark a revolution in insurance similar to what UPI achieved in payments.

What’s in Today’s Article?

• About UPI (background, Features of DPI)
• About Insurance Sector (Problems, IRDAI’s Proposal, Key Features, Significance, Challenges, etc.)

About UPI and the Digital Public Infrastructure Model

• UPI (Unified Payments Interface) is widely regarded as a landmark in India's Digital Public Infrastructure (DPI) journey.
• Its significance lies not merely in enabling digital transactions, but in creating an interoperable system that allowed an entire market to function differently.
• The key features of the DPI approach, as articulated in India's G20 Task Force on DPI, include:
  • Interoperability: systems work across providers, but without forcing uniformity
  • Minimalist building blocks: simple foundational components
  • Federated architecture: data stays where it is collected rather than being centralised
• The PIR proposal applies this same framework to insurance.

The Problem in Insurance

• Insurance remains one of the last large financial sectors where policies are not accessible at a single point. Several frictions follow from this.
• KYC has to be done multiple times, once for each insurer or policy, despite being the same individual.
• Claims history is not easily available, even though it should be. This affects both underwriting accuracy and the policyholder's ability to switch providers.
• Consumer awareness and product comparison still depend largely on a salesperson's narrative rather than verified information.
• The consultation paper aims to shift the sector from the old adage that "insurance is sold" to a world where "insurance is also bought", where customers have enough verified information to make informed choices.

The Missing Connective Tissue

• Recent legislation provides partial foundations:

• Sabka Bima Sabki Raksha Act: gives IRDAI a statutory anchor for insurance digitisation
• Digital Personal Data Protection Act: provides data privacy safeguards
• Bima Sugam: boosts accessibility

• What was missing was a connective tissue making these a unified framework. That is the role the PIR is intended to fill.

Design Principles of the PIR

• The consultation paper not only borrows the language of DPI but also its discipline.
• Its design principles derive from India's G20 Task Force on DPI, emphasising that systems should be interoperable but not uniform.
• Two structural features stand out:
  • Minimalist building blocks: the registry provides foundational components rather than prescribing detailed operations.
  • Federated architecture with source-system primacy: data remains where it is collected and is not centralised. This addresses a significant privacy concern, since no single repository would hold all insurance data.

The Registry's Function

• The PIR positions itself as a common information layer that lets participants discover, verify and exchange insurance information consistently.
• The argument is that with free flow of information, competitive advantage shifts to innovation and customer experience rather than to information asymmetry.
• Every stakeholder, including insurers and customers, has a shared role in making the ecosystem more transparent.

Governance Structure

• A critical element of the proposal is the governance model.
• The paper proposes restructuring the Insurance Information Bureau (IIB) into a not-for-profit firm wholly owned by IRDAI.
• Three features are highlighted as important:
  • Independent execution
  • Institutional neutrality
  • Rotating industry representation on the board
• The stated objective is to ensure the PIR gains statutory legitimacy without regulatory capture, that is, without being captured by the very industry it is meant to serve transparently.
• A phased rollout is proposed, focusing on early, visible wins rather than an all-out sweeping mandate from the outset.

What the PIR Offers Stakeholders?

• For Policyholders
  • A consolidated view of every policy across life, health, motor and property
  • Nominees, renewals, claims and unclaimed benefits visible in one place
  • Portability becomes genuinely practical rather than theoretical
• For Insurers
  • Verified policy and claims history, improving underwriting accuracy
  • Better fraud control through access to consolidated records
  • Standardised reporting, reducing compliance costs
• For Reinsurers and IRDAI
  • Aggregate exposure data, improving catastrophe preparedness
  • Stronger regulatory oversight through consolidated information
• For Banks and Government
  • Verified coverage data supporting better credit decisions
  • More targeted welfare delivery

Significance

• The framing of the PIR as insurance's "UPI moment" captures something important about its ambition.
• UPI did not merely digitise existing payment processes; it restructured how the market operated by making interoperability the default.
• If the PIR achieves the same for insurance, the consequences could include:

• Higher insurance penetration, as friction in purchase, comparison and claims reduces
• Faster claim settlement, particularly for motor claims with VAHAN linkages
• Reduced fraud, through verified history
• Better catastrophe preparedness, through aggregate exposure data
• Stronger credit markets, as verified coverage improves lender confidence

Considerations and Challenges

• Several issues will determine whether the PIR delivers on this potential.
• Data privacy and consent must be handled carefully, even with federated architecture. Federated systems still require query mechanisms, and those must operate within the Digital Personal Data Protection Act framework.
• Voluntary versus mandatory participation will shape adoption. A phased approach suggests initial voluntary uptake, which may limit the completeness of the data layer in early years.
• Governance independence will be tested in practice. Not-for-profit ownership by IRDAI with rotating industry representation is a careful design, but its effectiveness depends on implementation.
• Insurer incentives matter too. Incumbents with large books may see less advantage in transparency than new entrants, and the rollout must account for that asymmetry.