Insurance regulator IRDAI is extending the timeline of relaxations pertaining to solvency margin requirement for crop insurance, a move estimated to free up about ₹1,400 crore for the general insurers.
Since 2017-18, the period of admissibility of premium due from government for solvency calculation purpose has been relaxed from 180 days to 365. “Now, it has been decided to extend the relaxations from 2022-23 onwards till further orders,” Insurance Regulatory and Development Authority of India said on Tuesday.
The decision in is continuation of the series of reforms the regulator had been initiating and is expected to improve the solvency status of the general insurance industry as a whole.
IRDAI said the effect of this relaxation would be positive on the Industry as it would free up capital, which can be utilised for underwriting more business. “Approximately ₹1,400 crore will be unlocked and general insurers may use this opportunity to optimise the freed up capital in a way which leads to increased insurance penetration in India,” the regulator said in a release.
