Page 59 - Insurance Times September 2023

policies including Bid Bond, Advance Payment Bond and 6. Insurers shall carry out the QIS1 as per the Technical
Performance Bond, Court Bond and Customs Bond from the Guidance document with the data used for Actuarial
public, especially from businesses like Construction & Im- Valuation as at 31st March, 2023. Technical Guidance
port/Export. document and requirements regarding associated tem-

The general public are hereby advised not to undertake any plates for submission of results, mode of submission of
transaction related to Surety insurance business with results from QIS1 exercise along with supplementary in-
“Surety Seven”. formation is being informed separately to the insurers.
7. As clarified above, QIS1 results shall indicate initial as-
Technical Guidance in respect of Indian sessment and the Technical Guidance on proposed
framework may further be refined based on these re-
Risk Based Capital Framework – Quantita- sults as well as suggestions/feedback from the industry.

tive Impact Study-1 The insurers may please note that the Technical Guid-
ance shall be for the purpose of QIS1 only and should
10.08.2023 not be interpreted as indicative of final decision of the

1. This circular is issued in exercise of powers conferred IRDAI on RBC framework. It is noteworthy that this is
by Section 14 (2) (e) of the Insurance Regulatory and a separate exercise and insurers shall continue to sub-
Development Authority Act,1999. mit regulatory returns as mandated by the current
regulatory regime as and when due.
2. Applicability: This circular shall be applicable to all Life
Insurers, General Insurers, Standalone Health Insurers,
Reinsurers, Branches of Foreign Reinsurers and Lloyds Caution to General Public on un-registered
India.
entity by name Surety Seven providing
3. The Insurance Regulatory and Development Authority
of India (IRDAI) has been taking various initiatives to Surety Insurance
align the Indian Insurance Industry with the global best 10.08.2023
practices with the aim of ease of doing business and
finally to achieve the last mile of ‘Insurance for All by to achieve not only heightened financial resilience but also
2047’. One of the key initiatives pertains to development the collective vision of a catalyst for insurers in optimizing
and implementation of a Risk Based Capital (RBC) capital utilization and ensuring efficient risk management.
Framework for Indian insurance industry. As a part of As a major step towards transition to RBC from the present
this endeavour, a dedicated RBC Mission Mode team factor-based model, IRDAI has initiated the First Quantitative
was constituted with the explicit objective of rational- Impact Study (QIS1). This study holds paramount significance,
izing the current capital and solvency requirements. as it provides the opportunity to comprehensively evaluate the
potential impact on the capital and overall solvency of the in-
4. After detailed study, deliberations and discussions on
global practices including Insurance Capital Standard surers. A 'Technical Guidance' document has also been released
which is meticulously designed to guide and facilitate the in-
and Insurance Core principles of International Associa-
tion of Insurance Supervisors (IAIS), considering various surance industry in quantification and assessment of risks in the
other documents available in the public domain includ- QIS1. A circular has been issued in this regard.
ing RBC framework of other jurisdictions and submis- To ensure a streamlined progression, insurers are entrusted
sions of Economic Capital reports by insurers, discussions with the responsibility of submitting the outcomes of the
with various foreign supervisory authorities and exten- QIS1 within a prescribed timeframe. Subsequent to the
sive consultation with insurance industry, an initial Tech- evaluation of the QIS1 findings, the IRDAI envisions embark-
nical Guidance document has been prepared detailing ing on successive Quantitative Impact Studies (QIS), a dy-
the Indian Risk Based Capital (Ind-RBC) framework for namic sequence that may culminate in the fine-tuning and
carrying out the first Quantitative Impact Study (QIS1). evolution of the RBC Framework, ultimately resulting in its
5. The QIS1 shall be the first major step towards desired definitive implementation.
transformation and shall help in assessing the likely In essence, the IRDAI's strategic trajectory encapsulates a
impact on the Indian Insurance Industry of the proposed resolute commitment to fostering a robust and well-calibrated
framework for quantification of capital and solvency risk-capital symbiosis within the insurance landscape. By navi-
requirements following a Risk based approach. The re- gating this course with judicious foresight, the industry is
sults of QIS1 shall be submitted by insurers on or be- poised to achieve not only heightened financial resilience but
fore 30th November 2023. also the collective vision of inclusive insurance by 2047. T

52 September 2023 The Insurance Times