Life Insurance Corporation of India, General Insurance Corporation of India and New India Assurance continue to be domestic systemically important insurers (D-SII) and are consequently subject to increased regulatory oversight.
Announcing this, insurance regulator IRDAI said that LIC, GIC Re and New India have been identified, as in 2020-21, as D-SII for 2021-22. Given their nature of operations and systemic importance, the three insurers will make efforts to identify all relevant risks and enhance the level of corporate governance, apart from promoting a strong risk management framework and culture.
“D-SII refers to insurers of such size, market importance and domestic and global inter-affiliation, whose trouble or failure causes a significant dislocation in the domestic financial system. D for seamless availability of insurance services to the national economy. -SII’s continued functioning is thus crucial,” the regulator said on Thursday.
The D-SII is treated by the insurer as ‘too big or too important to fail’. Since this perception and the expected expectation of government support can increase risk-taking, reduce market discipline, create competitive distortions and increase the likelihood of future crises, the D-SII is exposed to systemic risks and moral hazards. should be subject to additional regulatory measures to deal with issues, IRDAI said.
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