Risk-based capital framework will help in effective functioning of insurers: Irdai
KOLKATA: The Insurance Regulatory and Development Authority of India (IRDAI) expects the proposed risk-based capital framework to facilitate the effective functioning of insurance companies that are focussed on specific geographies or products. This would also help improve insurance penetration in the country.
According to Nilesh Sathe, Member-Life, IRDAI, the framework, which is likely to be in place by 2020-21, will benefit insurers who are niche players, and can manage their risk well as it will ensure that the additional capital does not remain idle.
Currently, insurance companies need to have paid-up capital of ₹100 crore, irrespective of the sector they operate in.
"Right now there is standard requirement of capital, irrespective of what business you do. But in advanced nations it is not so. If there are some players looking only for regional presence or are looking at some specific line of business, then there is no need to keep aside so much capital. This is what the risk-based capital will address," Sathe told newspersons on the sidelines of an insurance seminar, which was organised by Merchants' Chamber of Commerce and Industry here on Thursday.
Merchants' Chamber of Commerce & Industry organised MCCI Insurance Forum 2018 titled "Indian Insurance Industry: the next Wave of Growth" on Thursday at Hotel Lalit Great Eastern, Kolkata.
The Forum focused on Opportunities and Challenges in Insurance sector and aimed at bringing together eminent policy makers, industry Captains, CEOs of reputed insurance houses, technology providers and consultants to lay down the future roadmap for insurance sector in India.