India’s insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI) has reduced the solvency margin requirement for insurance companies doing crop business.
The move is expected to increase the capacity of general insurers to underwrite more business. Since FY 2017-18, IRDAI said, it has been relaxing the period of admissibility of premium due from government for solvency calculation purpose, from 180 days to 365 days.
IRDAI said it has been decided to extend the above relaxation from FY 2022-23 onwards till further orders and the move is expected to improve the solvency status of the general insurance industry as a whole.
IRDAI said, it is expected that the effect of this relaxation will be positive on the Industry as it will free up the capital, which can be utilized for underwriting more business.
It is estimated that approximately Rs 1,400 crores will be unlocked and General insurers may use this opportunity to optimize this freed up capital in a way which leads to increased insurance penetration in India, it added.