Page 114 - Risk Management in current scenario
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RBC in the Indian Insurance
Industry
“Risk- Based Capital is recommended by the Committee
to IRDA to be used for the purpose of Solvency
assessment. What could be the possible impact of RBC
regime on the Indian Insurance Industry is discussed in
the write-up”
Background
Insurance Companies in India is to keeps reserves to meet the future
liabilities, these reserves are kept based on prudential regulatory norms.
However, regulators also prescribe additional money that the insurance
companies must keep aside in a form of solvency capital to meet the
contingency if it arises. Such money cannot be used for any other purpose.
This Solvency capital in India is currently calculated based on two-factor
approach, which however does not take into the account of all the risks that
insurance company faces. There is a shifting world over on the calculation
of capital based on all the risks that company faces as opposed to two-factor
approach currently used, commonly known as Risk-Based Capital (RBC)
Approach.
Introduction
This write-up assesses the high-level likely impact on the Indian Insurance
112 | Risk Management in Current Scenario
