Page 103 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 91

6. Impact of RBC on Indian Insurance Industry

Implementation of RBC coinciding with the implementation of IFRS 17 is expected to bring in a
paradigm shift in the way:

1. Products are designed, priced and sold;
2. Reinsurance treaties are designed and sold;

3. Financial statements are prepared, and profits are measured;
4. Risks in the insurance industry are measured and managed;
5. Corporate Governance is looked at;
6. Solvency capital is calculated and allocated to different products and lines of business.

One outcome of RBC that is almost certain is that the efficiently run insurance companies will see
a release in their risk-based capital as compared to the regulatory capital, while the not so efficiently run
insurers will need to bring in more capital to remain solvent under RBC.

7. Conclusion

It will be worth watching the insurance industry’s transition to Risk Based Capital coupled with
IFRS 17. The end result of all this is expected to be a stronger and more resilient insurance industry that
customers can trust with their risks and savings and help the Government resolve to make insurance
available for all by 2047.

PS : The article has been written for the non-technical and non-insurance audiences where significant
simplifications have been attempted to explain some complex aspects of Insurance capital requirements. It
is not actuarial advice and is merely an educational article to explain the concepts to a non-technical audience
and should be read as such. It is possible that some of this simplification could potentially be found technically
incorrect by a technical audience. For any such errors/omissions, the author assumes full responsibility
but no liability for the usage of this article by anybody. Lastly, the views expressed in the article are the
personal views of the author and do not represent the views of the Institute of Actuaries of India.