Insurance Regulatory and Development Authority of India (IRDAI) has reduced the regulatory returns insurance companies have to file. In a statement on Tuesday, the insurance regulator says the step is meant to ensure ease of business for insurance companies in India.
“IRDAI, in its continuous endeavour towards promoting ease of doing business for insurance companies in India, has reviewed and rationalised the regulatory returns to be filed by the insurance companies,” the regulator says.
In its circular dated June 10, 2022, IRDAI had reduced the number of offline returns to be submitted by life insurance companies from 40 to only four. Meanwhile, the number of online returns has been reduced from eight to five. Three separate certification requirements have also been consolidated into one.
This step comes after the similar relaxations were extended to general and health insurers through circulars dated May 12, 2022, and May 23, 2022, respectively.
IRDAI has also discontinued submission of hard copies of any reports, returns or other documents related to actuarial valuation or reinsurance in a circular dated May 11, 2022.
It is expected that reduced compliance burden will enable insurers to better focus their efforts and time in reaching out to every Indian with the ultimate goal of improving coverage and penetration.
IRDAI has also reduced the solvency margin requirement for insurance companies offering crop insurance. This move will increase the capacity of general insurers to underwrite more business, it says.
Since FY18, IRDAI has been relaxing the period of admissibility of premium due from the government for solvency calculation purpose. It has revised the requirement from 180 days to 365 days.
“Now, it has been decided to extend the above relaxations from FY23 onwards till further orders. This move will improve the solvency status of the general insurance industry as a whole,” IRDAI says.
IRDAI expects the effect of this relaxation to be positive on the insurance industry as “it will free up the capital, which can be utilised for underwriting more business”.
It is estimated that approximately ₹1,400 crore will be unlocked and general insurers may use this opportunity to optimise this freed up capital in a way which leads to increased insurance penetration in India.
