IRDAI mulls tighter licence rules for companies: Report
Insurance regulator IRDAI might review norms relating to minimum paid-up equity capital, reserves, sum at risk, solvency.
August 26, 2020 / 02:14 PM IST
The Insurance Regulatory and Development Authority of India (IRDAI) is planning to tighten licence norms for companies, amid financial stress in the insurance sector.
The insurance regulator might review norms relating to minimum paid-up equity capital, reserves, sum at risk, solvency, according to a Mint report.
"Only entities that are financially strong enough, not only at the time of entry but also during tough liquidity phases for 5-10 years, may get a licence to launch or acquire an insurance company," a source told the publication.
Moneycontrol could not independently verify the story.
IRDAI Chairman Subhash Chandra Khuntia had not yet responded when contacted by Mint.
The IRDAI is of the view that the minimum paid-up capital requirement for insurance companies needs to be raised from the existing Rs 100 crore, the report said.Also read: Health insurance awareness rising but not leading to surge in policy sales, says Bajaj Allianz General CEO
"Capital requirement norms and exposure parameters of promoters may need to be strengthened. Stronger promoter financials should be the new licence criteria," another source told the paper.
The IRDAI is also considering increasing the solvency margin threshold from the current 150 percent. Solvency margin measures the extent to which an insurer's assets exceed its liabilities.