Context:

The Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and The New India Assurance Co have been identifi ed as Domestic Systemically Important Insurers (D-SIIs) for 2020-21 by insurance regulator IRDAI.

D-SIIs

• D-SIIs refer to insurers of such size, market importance and domestic and global interconnectedness whose distress or failure would cause a signifi cant dislocation in the domestic fi nancial system.
• D-SIIs are perceived as insurers that are ‘too big or too important to fail’.
• This perception and the perceived expectation of government support will amplify risk taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in the future.

The new D-SIIs

• Largest insurer: LIC is the largest insurer in the country with a balance sheet of Rs 31.2 lakh crore.
• Sole reinsurer: GIC Re is the country’s sole re insurer.
• Largest general insurance company: New India is the country’s largest general insurance company.
• All three entities are owned by the government.

About IRDAI

• Insurance Regulatory and Development Authority (IRDA) has been set up as autonomous body under the IRDA Act, 1999.
• IRDAI regulates the Indian insurance industry to protect the interests of the policyholders and work for the orderly growth of the industry.
• IRDAI’s Mission: To protect the interests of policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

What will they do as ‘D-SIIs’

• Raise the level of corporate governance.
• Identify risk & promote management culture.
• Enhance regulatory supervision.

Methodology for identifi cation & supervision of D-SIIs.

• The parameters include: 
• the size of operations in terms of total revenue, including premium underwritten and the value of assets under management
• Global activities across more than one jurisdiction
• lack of substitutability of their products and/or operations.