Norms on risk-based capital in insurance are expected to take more time to be implemented. The regulator has set up a committee on an approach to this and on and liability valuation.
In 2013, the Insurance Regulatory and Development Authority of India (Irdai) had proposed a lower solvency margin for insurers, at 145 per cent against 150 per cent currently, including a risk charge. Earlier, in a proposal on a risk-based solvency approach, the regulator had constituted a committee to suggest a roadmap to move to Solvency-II norms.
Solvency-II is a European Union (EU) legislative programme, to be implemented in all 28 member-states. These are to insurers what Basel-III norms are to banks and introduces a harmonised and EU-wide insurance regulatory regime. The objective is uniform policyholder protection across countries. Insurance executives say India is not ready from an accounting perspective for these new norms. At present, India uses factor-based processes to arrive at the solvency margin.
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