 "Risk-based capital to assess solvency: Irdai")
Risk-based capital approach is the preferred way to assess the solvency capital of the branch of a foreign reinsurance company operating out of International Financial Services Centre (IFSC), according to the latest report of Insurance Regulatory and Development Authority of India (Irdai)'s reinsurance committee.
The committee, headed by Thomas Mathew T, however, said adopting this would take time as the matter would have to be discussed with insurance sector stakeholders.
The recent amendments to the Insurance Act, 1938 enabled foreign reinsurance companies to open their branch offices in India and operate in the Indian market.
The committee has recommended a new cadre of 'certifying actuary' to be introduced for branch reinsurance branches. The committee also recommended that a separate certifying actuary be appointed for life and non-life reinsurance operations.
The committee noted the limited availability of qualified actuaries, especially those working in general insurance and those with requisite knowledge of reinsurance business. To overcome this, it suggested foreign branch operations of reinsurers, operating out of IFSC, be allowed to use the services of their group / regional actuary or actuarial function head as 'certifying actuary' until local talent is developed.
Further, it said Irdai may allow the repatriation of surplus from a branch of foreign reinsurer, if the available solvency margin is above 175 per cent of the required solvency margin.