IRDAI designates LIC, GIC Re, and New India as DSIIs
1 min read 01 Apr 2023, 06:39 AM ISTLIC, GIC Re, New India remain Domestic Systemically Important Insurers: Irdai
PremiumThe Insurance Regulatory and Development Authority of India (IRDAI) announced on Friday that Life Insurance Corporation of India, General Insurance Corporation of India, and New India Assurance Co are still considered Domestic Systemically Important Insurers (D-SIIs) and noted that they are viewed as being "too big or too important to fail."
Domestic Systemically Important Insurers (D-SIIs) is used to describe insurance companies that are crucial to the domestic financial system due to their size, market significance, and connections both within the country and globally. The failure or financial instability of these insurers could have a severe impact on the stability of the domestic financial system.
The functioning of D-SIIs is vital 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.
Considering the significance of their operations and their systemic importance, it is crucial for the three Domestic Systemically Important Insurers (D-SIIs) to continue their efforts towards enhancing their level of corporate governance. They need to identify all relevant risks and promote a sound risk management framework and culture.
