LIC, GIC, New India Assurance are Domestic Systemically Important Insurers for 2021-22

The Insurance Regulatory and Development Authority (IRDAI) stated on Thursday that Life Insurance Corporation of India, General Insurance Corporation of India and New India Assurance Co Ltd continue to be identified as Domestic Systemically Important Insurers (D-SIIs) for 2021-22.

D-SIIs are insurers of such size, market importance and domestic and global interconnectedness whose distress or failure could cause a significant turbulence in the domestic financial system. The IRDAI stated that the continued functioning of D-SIIs is critical for the availability of insurance services.

D-SIIs are insurers that are perceived to be ‘too big or too important to fail’ (TBTF). IRDAI added that the TBTF perception may amplify “risk taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in future.” Considering this, IRDAI stated that D-SIIs must be subjected to additional regulatory measures.

The D-SIIs have been directed to carry forward their efforts in the following manner:

1. Increase the corporate governance level
2. Assess relevant risks and prompt a robust risk management framework and culture

IRDAI also stated these D-SIIs are being subjected to enhanced regulatory supervision.

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