After the RBI and SEBI provided relaxations for banks and capital market participants, insurance regulator IRDAI may also introduce interim relaxations in the time of COVID-19 for insurance companies. Sources tell CNBC-TV18 that the IRDAI may consider giving some relaxations around the minimum solvency margin which insurance companies are mandated to maintain.
All insurance companies are mandated to maintain a solvency margin of 150 percent and certain relaxation could be given if this solvency margin drops solely due to the nation-wide lockdown announced by the Government in order to contain the spread of Corona Virus. The extension would be applicable to insurance companies across life, general and health vertical.
Sources say that IRDAI feels that insurance companies may face a shortfall in the premium collection or see a dip in their investment portfolio due to the nation-wide lockdown. The relaxation is likely to be given to insurance companies on a case-to-case basis if they convince the regulator that the fall in solvency has been due to the lockdown in the country.
CNBC-TV18 has also learnt that the IRDAI may allow insurance companies to not mark down their investment book if a corporate is not able to pay interest/principal on its commercial papers bought by an insurance company. This relaxation will also be given to insurance companies if they are able to convince the regulator that a case of non-payment of interest/premium has happened because of the lockdown in the country.
Earlier IRDAI had asked all insurance companies to give an additional grace period of 30 days for payment of renewal premium to its policyholders.
The insurance regulator had also given an extended period of 15 days for insurance companies to submit monthly returns. Also, the regulator gave an extended period of 30 days for insurance companies to submit quarterly returns.
IRDAI has also allowed insurance companies to conduct their board meetings through audio/video conferencing.
