State-owned Life Insurance Corporation of India, General Insurance Corporation of India and New India Assurance Company remain Domestic Systemically Important Insurers (D-Slls) and hence subjected to enhanced regulatory supervision, according to insurance regulator IRDAI.
D-Slls 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. Therefore, the continued functioning of D-Slls is critical for the uninterrupted availability of insurance services to the national economy, the Insurance Regulatory and Development Authority of India said on March 27.
Like in 2022-23, LIC, GIC Re. and New India Assurance continue to be identified as D-Slls for the year 2023-24, it said.
Besides the perception that D-Slls are too big or too important to fail the 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-Slls 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, such insurers have to carry forward their efforts in terms of raising the level of corporate governance; and identify all relevant risks and promote a sound risk management framework and culture. D-SIIs are being subjected to enhanced regulatory supervision, IRDAI said.
