Life Insurance Corporation of India, General Insurance Corporation of India and New India Assurance remain Domestic Systemically Important Insurers (D-SIIs) and consequently subject to enhanced regulatory supervision.
Insurance regulator IRDAI said this while announcing LIC, GIC Re and New India have been identified, like in 2020-21, as D-SIIs for 2021-22. Given their nature of operations and systemic importance, the three insurers have to carry on efforts to raise the level of corporate governance besides identifying all relevant risks and promoting a sound risk management framework and culture.
“The D-SIIs refer to insurers of such size, market importance and domestic and global inter connectedness, whose distress or failure would cause a significant dislocation in the domestic financial system. The continued functioning of D-SIIs is thus critical for the uninterrupted availability of insurance services to the national economy,” the regulator said on Thursday.
D-SIIs are perceived as insurers ‘too big or too important to fail’. Since this perception and the perceived expectation of government support may amplify risk taking, reduce market discipline, create competitive distortions and increase possibility of distress in future, the D-SIIs should be subjected to additional regulatory measures to deal with the systemic risks and moral hazard issues, IRDAI said.
