Insurance Watchdog Role Should Be Advisory: Experts

This was stated by Life Insurance Corporation of India chairman N M Govardhan and GIC chairman K C Mittal at a seminar on Insurance - an international perspective organised by KPMG Peat Marwick yesterday.

Govardhan also said a strong regulatory framework should be in place to

give proper counselling to market players and efforts should be made towards a human rather than a mechanised interpretation of statistics. The regulatory body should have enough intervention powers to detect any disease at an early stage to protect the interests of policy holders, he said.

Speaking at the seminar Jonathan Spencer, director of insurance, department of trade and industry in the UK said regulatory structures should suit the circumstances of individual countries.

 

Spencer also said the UK government is keen to offer assistance in developing the insurance industry.

He said effective regulation and supervision was the bedrock of a sound insurance industry.

The British insurance expert said the UK insurance market was one of the most liberal and sophisticated in the world, but the techniques now applied in the UK can be generally applied.

However, he warned that it would be improper to transpose any countrys regulatory system into another when they have different economic cirumstances and varied traditions.

Speaking on the power of intervention by the regulatory authority Spencer said, Supervision is designed to ensure that problems are detected and addressed before they become critical to the insurers solvency.

In the UK, formal powers of intervention do exist and the industry is aware that the regulatory authority will use these when needed, he said.

The main ground for intervening is when a company has failed to satisfy an obligation most commonly when it has not maintained the required minimum margin of solvency, he added.