Insurance regulator IRDAI is extending the exemption deadline related to solvency margin requirement for crop insurance, estimated to free up around Rs 1,400 crore for general insurers.
From 2017-18, the period of admissibility of premium payable from Government for solvency calculation purpose has been reduced from 180 days to 365. “Now, it has been decided to extend the exemption from 2022-23 till further orders,” the Insurance Regulatory and Development Authority of India said on Tuesday.
The decision to continue the series of reforms initiated by the regulator is expected to improve the solvency position of the general insurance industry as a whole.
IRDAI said the impact of this relaxation will be positive on the industry as it will free up capital, which can be used for underwriting more business. “Approximately ₹1,400 crore will be disclosed and general insurers can use this opportunity to optimize the free capital in a manner that increases the penetration of insurance in India,” the regulator said in a release.