Insurance regulator Irdai on Thursday said the state-owned LIC, GIC Re and New India continue to be identified as Domestic Systemically Important Insurers (D-SIIs) for 2021-22.
D-SIIs refer to insurers of such size, market importance and domestic and global inter connectedness, whose distress or failure would cause significant dislocation in the domestic financial system.
"LIC, GIC Re and New India continue to be identified as Domestic Systemically Important Insurers (D-SIIs), as in the 2020-21 list of D-SIIs," Insurance Regulatory and Development Authority of India (Irdai) said in a release.
Life Insurance Corporation of India; General Insurance Corporation of India; and New India Assurance Co. Ltd, are on the list of D-SIIs for the year 2021-22.
It said D-SIIs are perceived as insurers that are ‘too big or too important to fail’ (TBTF). This perception and the perceived expectation of government support may amplify risk-taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in future.
"These considerations require that D-SIIs should be subjected to additional regulatory measures to deal with the systemic risks and moral hazard issues," Irdai said.
The regulator further said given the nature of their operations and the systemic importance of the D-SIIs, the 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.
D-SIIs are being subjected to enhanced regulatory supervision, Irdai added.
The continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy.