Business Standard

Life firms ask regulator to allow risk-based solvency regime for ULIPs

Life insurance companies will raise their solvency margin and free up capital that can be used for other purposes

Life Insurance
Premium

Once a risk-based solvency regime is implemented, insurance companies will have to hold capital in proportion of the business they write.

Subrata Panda Mumbai
Some life insurance companies plan to move the Insurance Regulatory and Development Authority (Irdai), seeking a risk-based solvency regime for unit-linked insurance plans (ULIPs), where the risk is borne by policyholders.

If the regulator gives its nod to this proposal, the capital blocked for ULIPs will come down. This will boost the solvency margins of insurers and release capital for other purposes.

Currently, the insurers follow a rule-based solvency regime. As a result, insurers’ assets are required to be 1.5 times, or 150 per cent, of their liabilities. The minimum solvency ratio that insurance companies must maintain is 1.5

What you get on BS Premium?

  • Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • Pick your 5 favourite companies, get a daily email with all news updates on them.
  • Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • Preferential invites to Business Standard events.
  • Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
VIEW ALL FAQs

Need More Information - write to us at assist@bsmail.in