Insurance regulator Irdai Thursday said it will move to a risk-based supervisory framework in view of significant rise in insurance firms and their intermediaries and a structured approach is needed to asses various risks and ensure financial soundness. The Insurance Regulatory & Development Authority of India (Irdai) is in the process of adopting ‘Risk Based Supervisory Framework’ (RBS or RBSF) for holistic supervision of insurance sector in India, it said in a circular to all insurers.
For this, Irdai will develop an overall plan by undertaking a review of the current regulatory and supervisory regime. A framework will be prepared for holistic supervision by incorporating assessment mechanism into insurance supervision. To begin with, Irdai said it will primarily focus on compliance based approach for supervision as over the past two decades, the number of insurance entities to be supervised have increased manifold.