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Irdai names LIC, GIC as 'domestic systemically important' insurers

These were the same institutions that were identified as DSII in 2021-22

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BS Reporter

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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.

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.

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First Published: Mar 31 2023 | 10:48 PM IST

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