The insurance regulator IRDAI has formed a 10-member steering committee to help implement by March 2021 the new risk-based capital (RBC) regime that will also enhance protection to policyholders.
The decision to move to the RBC norms was taken after recommendations of a panel which gave its report in July this year, IRDAI said in a notification. The committee suggested that the industry move ahead with RBC to ensure that capital held by a company will take into account its overall risk profile, according to a report in Livemint.
The current solvency rules do not help in assessing whether the capital held is adequate enough for the risks inherent in the insurance business, IRDAI added.
Before its recommendations to IRDAI, the committee had carried a survey of life insurance companies in which the majority of them favoured the RBC regime. It is tasked to ensure smooth and timely implementation of the RBC regime from existing solvency capital regime.
The panel will also recommend the scope of work of external consultants for the new regime.