Page 35 - Insurance Times August 2020

are unprecedented and the adverse impact on financial asked questions for COVID-19 claims prominently on
markets is quite telling. Without exception, the non-life their websites.
insurance sector is severely burdened and we are afraid we
will have difficulty in meeting certain regulatory 2. Business continuity plans: Insurers have also been
requirements. asked to put in place a business continuity plan (BCP)
which inter-alia deals with processes, transactions,
GIC also said that companies could be allowed to consider reporting and customer services to be handled in a
mark-to market position as on 29 February 2020 as the basis seamless manner to take care of the present situation.
of computing solvency. Alternatively, the IRDAI may relax A copy of the same will have to be submitted to IRDAI.
the minimum solvency requirement of 1.5 times for the time Insurers will have to set up a crisis management
being, on the same lines as the regulator had relaxed it at committee to monitor the current situation on real time
the time of dismantling the motor third party pool. Also, the basis and to take appropriate timely decisions on the
insurance industry needs to provide for stressed debt following issues:
investments as the same is not allowed for income tax a. Issues pertaining to safety of staff, policyholders,
assessment till the investment is written off. intermediaries and agents
b. Assessing new challenges that may emerge on a
In view of the huge provisions made by the industry and the
day-to-day basis and measures to mitigate them
same disallowed for the purpose of income tax purpose, DTA and
(Deferred Tax Assets) created for such differences need to
be allowed for solvency computation. Further more, GIC c. Adopting necessary measures to minimize business
sought IRDAI's forbearance in the compliance requirement disruption.
of limits on rural and social sector obligations. The crisis management committee will also be required
to provide regular inputs to the risk management
committee of the insurer.
Policyholder's interest:
The risk management committee will evaluate all
Insurance Regulator has issued detailed instructions for
Indian insurers to meet the challenges emerging from the major risks and shall devise necessary mitigation
developing COVID-19 pandemic. Insurance, being a critical measures. Any severe impact on the operations or
requirement of the population, has been exempted from the capital requirements or solvency margin shall be
lockdown. However, insurance companies and other promptly communicated to the authority.
regulated entities are advised to operate their offices with 3. Cyber risks and data security: IRDAI has also focused
absolutely necessary staff so as to maintain essential on cyber risk and data security. Due to enhanced
insurance services including claims settlement, authorization remote working, it is possible that there could be an
for hospitalization, renewal of insurance policies and such increase in the number of cyber attacks on personal
other activities. computer networks. IRDAI has asked the insurers to
take precautionary measures to address such cyber risks
In all the operating offices, extreme care needs to be taken
by all concerned to maintain prescribed hygiene, social
distancing etc. The IRDAI press release also contains an
exhaustive list of safety measures that include several steps
to streamline communications with major stakeholders of
the companies.

1. Communication strategy: Insurers have to prominently
display on their website a dedicated helpline number
for policyholders and another help line number for other
stakeholders including agents and intermediaries.
Adequate arrangements may be made to service all the
policyholders and other stakeholders satisfactorily
through these help lines. The regulator has also
instructed insurance companies to display frequently

The Insurance Times, August 2020 35