Page 11 - The Insurance Times April 2025

According to Rahul Bhuskute, chief in- Under the current framework, IRDAI It further said that before taking expo-
vestment officer (CIO), Bharti Axa Life allows insurers to deal in Rupee Inter- sure to equity derivatives, insurers are
Insurance, this move by IRDAI is par- est Rate Derivatives in the form of advised to put in place board approved
ticularly significant for life insurers Forward Rate Agreements (FRAs), In- hedging policy; internal risk manage-
since they have a higher equity alloca- terest Rate Swaps and Exchange ment policies and processes; informa-
tion compared to their general coun- Traded Interest Rate Futures (IRFs). tion technology infrastructure; and
terparts. Besides Fixed Income Derivatives, in- regular and periodic audits.
surers are also permitted to deal in
IRDAI allows insurers to Credit Default Swaps (CDS) as protec- IRDAI plans to put risk
tion buyers.
use equity derivatives to management at industry
"As there is an increasing trend in in-
hedge exposures vestments in equity market by insurers core to align with global
IRDAI permitted insurers to use equity and owing to associated volatility in the best
derivatives to hedge their portfolios, a equity prices, a need is felt to permit IRDAI is working toward implementing
move aimed at reducing risk in a vola- Hedging through equity derivatives. major regulatory changes over 24
tile capital market. These guidelines aim to provide insur- months, multiple industry sources told,
"This move aims to facilitate insurers ers with enhanced opportunities for pointing to the regulator's goal of
to hedge their existing equity expo- risk management and portfolio diver- boosting risk management and putting
sures against volatility in equity mar- sification," the regulator said. in place framework of best global prac-
tices.
ket and ensure preservation of market The equity derivatives shall be used
value of equity investments and only for hedging purpose. "Any Over Among the proposed changes are the
thereby reducing risks in equity port- the Counter (OTC) exposure to equity adoption of a risk-base (RBC) frame-
folio," it said. derivatives is prohibited," IRDAI said. work and Indian accounting standards
(Ind -S 11 risk-based supervisory frame-
work (RBSF).
Bima Vistaar: Decks cleared for first-ever all-in-one
"While global markets have taken up
insurance plan to five years to implement frame-
Decks have been cleared for the rollout of the much awaited Bima Vistaar, works, IRDAI is looking for a faster
the first ever composite insurance product covering death, personal acci- rollout taking lesson global markets
dent, property and surgical hospitalisation at an affordable premium. while ensuring the industry has time to

IRDAI and industry captains have arrived at an agreement on the final adjust, said. The regulator is asking for
model of the product, which is to be rolled out probably from April 2025. industry feedback before imp the mea-
sures.
According to the insurance regulator, "a compliant, simple, comprehensive
and customer friendly model has now been signed off by the top brass of "While global markets have taken up
the industry in dialogue with the industry and the Bima Sugam team a couple to five years to implement similar
of days ago." frameworks, IRDAI is looking for a
faster rollout taking lessons from the
An all-in-one insurance plan, Bima Vistaar is one of the key components of global markets while ensuring the in-
the ambitious project of the IRDAI popularly labelled as the Bima Trinity, dustry has time to adjust," a source
comprising Bima Sugam, Bima Vahak and Bima Vistaar.
said. The regulator is asking for indus-
The project operating mechanism with the necessary technology platform try feedback before implementing the
has also been upgraded to facilitate advanced digital management of the measures.
product.
IRDAI began the transition to RBC
In line with the vision of IRDAI to achieve insurance for all by 2047, "The in 2023 by launching its first Quantita-
pricing has also been discussed, which is yet to be announced by the regu- tive Impact Study (QISI). It is not pre-
lator in the final rollout of the product. While nothing can be said now, a paring for a second study, which will
broad range could be between Rs. 1,500 to Rs. 2,000 per individual for a help refine the framework, the sources
sum assured of Rs. 2 lakh," an industry source told. said.

The Insurance Times April 2025 11