The Hindu Business Line : Solvency margins of non-life players may dip

Hyderabad, Dec. 5 There is a likelihood of a dip in the solvency margin ratio of non-life players in the current de-tariffing regime, according to Mr C.S. Rao, Chairman, Insurance Regulatory and Development Authority (IRDA).

“As a result of de-tariffing, the competition among the non-life players has increased. This might result in a decrease in the premiums, which in turn might trigger a dip in solvency margins,” Mr Rao told Business Line. As per the IRDA (Assets, Liabilities and Solvency Margin of Insurers) Regulations, 2000, all insurers should maintain a mandatory solvency ratio of 1.5 throughout the year and file the solvency margin statement on March 31 every year.

Monitoring needed

“But now we feel that a close monitoring of the solvency margins is required as the controls on the tariffs on non-life industry had been relaxed. A quarter-to-quarter monitoring of solvency margins will be done hereafter,” Mr Rao said.

However, Mr Rao preferred not to comment on any instance of a company/companies going down on the margin front.

“I don’t call it tightening of control but closer monitoring. Additional capital flows need to be injected if the margins dip below the stipulated ratio of 1.5. We want to ensure that,” he explained.

The move was a precaution the regulator had taken in the life sector from the first quarter of the current year. It had been extended to the non-life sector now with immediate effect, he added.

The Authority had already communicated about the revised norms of filing solvency margin statement to the industry a couple of days ago.

It is expected that the stipulation would enable insurance companies to lay down their business plans and be in the position to meet their capital requirements in a timely manner.

More Stories on : General Insurance | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page