Irdai eases solvency margin requirement for insurers underwriting crop biz
In a major step, the Insurance Regulatory and Development Authority of India (IRDAI) has reduced the solvency margin requirement for general insurers that underwrite crop business, thereby freeing up capital to the tune of Rs 1,400 crore. The insurance regulator expects this move to increase the capacity of general insurers to underwrite more business.
“It is expected that the effect of this relaxation will be positive on the industry as it will free up the capital, which can be utilised for underwriting more business. It is estimated that approximately Rs 1,400 crore will be unlocked and general insurers may use this opportunity to optimize this freed up capital in a way which leads to increased insurance penetration in India,” the insurance regulator said in a statement.
The insurance regulator IRDAI has been relaxing the period of admissibility of premiums due from state governments for solvency purposes from 180 days to 365 days since 2017-18. It has now decided to extend this relaxation from FY23 onwards until further orders. “This move will improve the solvency status of the general insurance industry as a whole,” the regulator said.
In a circular, the insurance regulator said that premium receivables related to state/central government-sponsored schemes for all quarters of FY23 and onward to the extent that they are not realised within a period of 365 days will be placed with value zero.
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