The decision to move to the RBC norms from the current solvency principle regime has been taken after recommendations of a panel which gave its report in July this year, Irdai said in a notification.
A shift in regime is felt because the current solvency based rules do not help in assessing whether the capital held is adequate enough for the risks inherent in the insurance business, it added.
The RBC Committee headed by Dilip C Chakraborty in its report to Irdai suggested that the industry should move ahead with RBC to ensure that capital held by a company will take into account its overall risk profile.
"Moving to RBC would also lead to enhanced protection to policyholders where it becomes possible to understand the level of confidence provided by the capital for a given level of risks," it had suggested.
As also, the global insurance industry has moved to RBC regime, the committee in its report said it was time for India to move in that direction.
Before its recommendations to Irdai, the committee also had done a survey of life insurance companies in which majority of them favoured the RBC regime.
The ten-member steering committee is tasked to ensure smooth and timely implementation of RBC regime from existing solvency capital regime and ensure completion of the project as per target. It will also recommend the scope of work of the external consultants for the new regime.
The committee will be headed by Irdai Member (Actuary), Pournima Gupte.
Other nine members of the committee include four Irdai officials; Chairman of RBC Committee; Chairman of Life-sub- committee of RBC Committee; Chairman General-sub-committee of RBC Committee, one senior external actuarial advisor and one representative from the Institute of Chartered Accountants of India.
The new RBC Regime is expected to be implemented by March 2021 while the current Solvency Regime will continue till switch over to the RBC Regime.
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