Insurance regulator on Friday identified Life Insurance Corporation (LIC), New India Assurance, and General Insurance Corporation (GIC Re) as domestic systemically important insurers (D-SIIs) for 2022-23.
These were the same institutions that were identified as DSII in 2021-22.
D-SIIs refer to insurers of such size, market importance, and domestic and global interconnectedness, whose distress or failure would cause a significant dislocation in the domestic financial system.
Therefore, the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy, Insurance Regulatory and Development Authority of India said.
Since these institutions have been identified as D-SIIs, they have to raise the level of corporate governance; identify all relevant risks and promote a sound risk management framework and culture.
D-SIIs, typically, are subjected to additional regulatory measures to deal with systemic risks and moral hazard issues.
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Generally, 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”, Irdai said.