Regulator Irdai on Friday said Life Insurance Corporation of India, General Insurance Corporation of India, and New India Assurance Co continue to remain as Domestic Systemically Important Insurers (D-SIIs) and perceived as "too big or too important to fail".
Domestic Systemically Important Insurers (D-SIIs) refer to insurers of such size, market importance, and domestic and global interconnectedness, whose distress or failure would cause a significant dislocation in the domestic financial system.
Therefore, the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy.
"LIC, GIC Re., and New India continue to be identified as Domestic Systemically Important Insurers (D-SIIs), as in the 2021-22 list of D-SIIs," the Insurance Regulatory and Development Authority of India (Irdai) said while releasing the list of D-SIIs for the year 2022-23.
It said D-SIIs are perceived as insurers that are "too big or too important to fail".
This perception and perceived expectation of government support may amplify risk-taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in the future, according to Irdai.
"These considerations require that D-SIIs be subjected to additional regulatory measures to deal with systemic risks and moral hazard issues," the regulator said, and added that D-SIIs are being subjected to enhanced regulatory supervision.
Given the nature of their operations and systemic importance of the D-SIIs, these three insurers have to carry forward their efforts to raise the level of corporate governance; and identify all relevant risks and promote a sound risk management framework and culture.