Domestic Systemically Important Insurers 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, said the Irdai
Hyderabad:
Life Insurance Corporation(LIC), GIC Re., and New India Assurance(NIA) continue to be identified as Domestic Systemically Important Insurers (D-SIIs) in 2022-23.
Domestic Systemically Important Insurers 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, said the Irdai
Therefore, the continued functioning of D-SIIs 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’ (TBTF). This perception and perceived expectation of government support may amplify risk-taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in the future.
These considerations require that D-SIIs be subjected to additional regulatory measures to deal with systemic risks and moral hazard issues.
Given the nature of their operations and the systemic importance of the D-SIIs, these insurers have to carry forward their efforts on the following:
(i) Raise the level of Corporate governance;
(ii) Identify all relevant risks and promote a sound risk management framework and culture.
D-SIIs are being subjected to enhanced regulatory supervision.