Domestically Systemically Important Insurers – UPSC Prelims

Domestic Systemically Important Insurers
  • The Life Insurance Corporation of India (LIC), General Insurance Corporation of India and The New India Assurance Co have been identified as Domestic Systemically Important Insurers (D-SIIs) for 2020-21 by Insurance Regulatory and Development Authority of India (IRDAI).
  • 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.
  • IRDAI, just like the banking regulator RBI did to identify such “too big to fail” banks and NBFCs, had endeavoured to identify such companies in the insurance business in the March of 2019, in the aftermath of the collapse of IL&FS which triggered a massive liquidity crisis in the financial markets.
  • The International Association of Insurance Supervisors (IAIS) has also asked all member countries to have a regulatory framework to deal with Domestic-SIIs.