The insurance sector in India is still far from Solvency II norms, as the country does not have the requisite statistical database.
"We haven’t said we will accept it. It’s a risk-based model, our country does not have that statistical database to go for that. I don’t think we have taken a position on whether we will be using Solvency II. Solvency II is an European process. In India we have a factor-based process of solvency, which is formula centric. We are comfortable with that," said RK Nair, member (F&I), Insurance Regulatory and Development Authority.
Solvency II is the updated set of regulatory requirements for insurance firms that operate in the European Union. The rationale is to facilitate the development of single market in insurance services in Europe, while securing an adequate level of consumer protection.
"The moment we adopt Solvency II, we have to use internal-risk model, which can start showing different figures. Unless and until the regulator and the intermediary has a proper method of evaluating risk, it could give different figures," he said, adding that "I think we are on right track, we have 150 per cent solvency."
Also Financial Sector Assessment Programme (FSAP) is likely to be completed by 2012, he said. India has sought a comprehensive FSAP by the World Bank and IMF, for assessing regulatory norms practiced in the country are meeting the international standards.
Also, IRDA has been examining the bancassurance model of insurance penetration. "A panel was set up by the IRDA to look into the bancassurance model. The panel has already submitted its report," said Nair
On the IPO guidelines for non-lie insurance companies, he said the rules would be similar to those for life companies, but disclosures would be different."The nature of disclosures are under finalisation," he said.
