IRDAI Relaxes Solvency Margin Requirement For Crop Insurance
The IRDAI has lowered the solvency buffer threshold for insurers conducting crop business as part of a series of changes. The general insurers’ ability to accept additional business will increase as a result of this action.
The period of admissibility of premium owed by the government for solvency calculation purposes has been loosened by IRDAI since FY 2017–18, increasing it from 180 days to 365 days. It has now been decided to prolong the aforementioned relaxations beginning in the fiscal year 2022–2023 until future orders. The general insurance business as a whole will benefit from this action in terms of solvency.
The industry is anticipated to benefit from this deregulation since it will free up funds that can be used to underwrite new transactions. The general insurers may make use of this chance to maximize the approximately Rs. 1400 crores that would be released, increasing the penetration of insurance in India.