The Hindu Business Line : PSU insurers told to have CIS system by Sept

Bangalore, Aug. 23 The Finance Ministry has asked public sector insurance companies, both general and life, to begin implementation of Core Insurance Solution (CIS) by September. CIS is identical to Core Banking Solution and is intended to completely network all the branches of the insurance companies. Currently only private sector insurers are fully networked.

Among the PSU insurers, only Oriental Insurance Company Ltd networking is close to completion.

According to sources, the Ministry has suggested that the PSU insurers emulate the Oriental Insurance model for their respective CIS. The company employs a centralised IT solution model. This entails transfer of data from operating offices to the controlling office.

Barring Oriental Insurance, other insurers are sceptical about complying with the deadline One Chief Executive said, “The deadline is far too short.” But with pressure mounting from the Government, PSU insurers have stepped up the pace of CIS.

National Insurance Company Ltd for instance has appointed PricewaterhouseCoopers as consultants. The Chairman and Managing Director, Mr V. Ramasaamy, said: “We have redrafted our IT programme factoring in CIS.”

The Finance Ministry’s interest for a CIS in insurance is to help in creating a centralised data pool for assessing assets and liabilities on a real time basis.

The sources said that generation of such data was also intended to provide an accurate management information system. With the migration to the free pricing regime, real time data on solvency is required. In fact, sources said, absence of real time data was the key impediment for migration to a quarterly solvency regime, as in the case of life insurance companies.

One of the major drawbacks in the annual reporting of solvency is that it fails to capture the cyclical movements of assets that comprise both equities and fixed income securities.

The quarterly solvency reporting regime entails valuing the assets at the end of each quarter like public sector banks.

The sources said that the shift to a real time solvency would also help insurers to assess their reinsurance requirements for complying with the regulators solvency guidelines.

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