Domestic systemically important insurers(D-SIIs) are already being subjected to enhanced regulatory supervision as the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy
On Thursday, the insurance regulator IRDAI has said government owned insurers including Life Insurance Corporation, GIC Re and New India Assurance continue to be identified as domestic systemically important insurers (D-SIIs), as in the 2020-21 list of D-SIIs.
D-SIIs are perceived as insurers that are ‘too big or too important to fail’ (TBTF) and all three insurers should be subjected to additional regulatory measures to deal with the systemic risks and moral hazard issues, said the IRDAI.
D-SIIs are already being subjected to enhanced regulatory supervision as the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy.
According to the IRDAI, 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.
This perception and the perceived expectation of government support may amplify risk taking reduce market discipline, create competitive distortions, and increase the possibility of distress in future.
Given the nature of their operations and the systemic importance of the D-SIIs, these insurers have to carry forward their efforts on the issues like raise the level of corporate governance, identify all relevant risks and promote a sound risk management framework and culture, said IRDAI.