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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
