Page 57 - The Insurance Times October 2025

xi. Insurance is a contract, wherein both the insurer amounts, for the closure period on account of Covid-
and insured are bound by the terms of the 19 pandemic is hereby declined.
contract. Any direction to refund or adjust
12. This representation is accordingly disposed of.
premium, as demanded by the petitioner, would
have to be within the terms of the insurance
contract. Risk Based Capital (RBC)- Quantitative Impact
xii. It is a matter of record that insurers have received Study
claims reported for losses to school busses August 14, 2025
occurring during the Covid-19 Lockdown period.
1. Development and implementation of Risk Based Capital
xiii. Sudden catastrophic events may result in (RBC) Framework for Indian Insurance Industry is one
unprecedented losses from a single event such as of the key initiative undertaken by IRDAI among various
floods, earthquakes, cyclones etc. Insurers other initiatives to align the Indian Insurance Industry
continue to cover for such eventualities during the
with global best practices. As a key step in this
validity of the insurance policy and to settle claims
direction, the IRDAI conducted the First Quantitative
(if valid) without any demand for additional Impact Study (QIS 1) to assess the RBC framework's
premium, as per the terms & conditions of the initial impact in the year 2023.
insurance contract. It may be noted that several
catastrophes like Nisarga (June 2020), Yaas (May 2. Basis the insights gained from the initial impact study
2021), Tauktae (May 2021) etc. occurred during and suggestions received from the insurers, it was
the Lock-down period in addition to various considered necessary to further improve the
incidents of heavy rains and inundations and framework and conduct Second Quantitative Impact
insurers would have held such risks covered during Study (QIS 2).
the currency of issued insurance policies. 3. Insurers shall carry out the QIS 2 as per the Technical

xiv. An insurance policy is issued in anticipation of Guidance document with the data used for Actuarial
future fortuitous events. Events for which an Valuation as at 31st March, 2025. Technical Guidance
insurance is taken can never be known in advance. document along with data submission template and
Circumstances that increase or decrease the requirements regarding associated template for
probability of occurrence of such events also submission of results, mode of submission of results from
cannot be predicted with certainty. This inherent QIS 2 exercise along with supplementary information
uncertainty plays a key role in the design and are being informed separately to the insurers.
pricing of any insurance product. Accordingly, it is 4. This circular shall be applicable to all Life Insurers,
neither possible nor appropriate to revise
coverages and pricing after the period of coverage General Insurers, Standalone Health Insurers,
Reinsurers, Branches of Foreign Reinsurers and Lloyds’
is over, whether in part or whole.
India.
xv. Consequently, insurers can neither revise any terms
5. The QIS 2 shall be the pivotal step towards transition
of coverage nor the pricing of the insurance policies
of Indian Insurance Industry to the Risk Based Capital
retrospectively, for the policies issued by them
regime. The results of QIS 2 shall be submitted by
including those issued to cover School buses.
insurers on or before 15th October 2025.
10. In light of the foregoing arguments, for both TP and
OD insurance coverage, it is neither feasible nor 6. The insurers may please note that the Technical
desirable for IRDAI to formulate any policy or issue any Guidance referred here shall be for the purpose of QIS
directions to either vary the coverage or any reduction 2 only and shall not be interpreted as indicative of final
in premium for the period of lock-down on account of decision of the IRDAI on RBC framework. It is
Covid-19 pandemic. noteworthy that the QIS 2 is an additional exercise only
and insurers shall continue to submit regulatory returns
11. Therefore, the representation of the petitioners
as mandated by the current regulatory regime as and
seeking formulation of a viable policy to exempt buses
of educational institutions from payment of insurance when due.
premium or to proportionately reduce the premium 7. This has approval of the Competent Authority.

52 October 2025 The Insurance Times