The Insurance Regulatory and Development Authority of India (IRDAI) has identified the Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and The New India Assurance Co. as Domestic Systemically Important Insurers (D-SIIs) for 2020-21.
Key takeaways
The three public sector insurers shall raise the level of corporate governance, identify all relevant risks and promote a sound risk management culture.
As D-SIIs, they will also be subjected to enhanced regulatory supervision.
D-SIIs shall be listed on an annual basis.
Size in terms of total revenue, including premium underwritten and the value of assets under management are among the parameters on which the insurers are identified.
Important value additions
D-SIIs refer to insurers of such size, market importance and domestic and global interconnectedness whose distress or failure would cause a significant dislocation in the domestic financial system.
Their continued functioning is critical for the uninterrupted availability of insurance services to the national economy.
D-SIIs are perceived as insurers that are too big or too important to fail. Such a perception and the expectation of government support may amplify risk taking, reduce market discipline, create competitive distortions and increase the possibility of distress in future.
