Print Friendly, PDF & Email

Domestic Systemically Important Insurers (D-SIIs)

Topics Covered: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Domestic Systemically Important Insurers (D-SIIs):


What?

Three insurers- Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and New India Assurance Co.- have been recognised as Domestic Systemically Important Insurers (D-SIIs) for 2020-21.

By?

Insurance Regulator and Development Authority of India (IRDAI).

What are D- SIIs?

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.

  • D-SIIs are perceived as insurers that are ‘too big or too important to fail’ (TBTF).
  • Therefore, the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy.

How are they classified?

To identify such insurers and put them to enhanced monitoring mechanism, IRDAI has developed a methodology for identification and supervision of D-SIIs.

The parameters, as per the methodology, include:

  1. Size of operations in terms of total revenue, including premium underwritten and the value of assets under management.
  2. Global activities across more than one jurisdiction.

Implications:

  • The three insurers will now be subjected to enhanced regulatory supervision.
  • They have also been asked to raise the level of corporate governance, identify all relevant risks and promote a sound risk management culture.

InstaLinks:

Prelims Link:

  1. About D-SIIs.
  2. Who can declare them?
  3. Implications.
  4. Recent additions.
  5. Functions of IRDAI.

Mains Link:

What are Domestic Systemically Important Insurers (D-SIIs)? Why are they considered too big or too important to fail’ (TBTF).

Sources: the Hindu.