SOLVENCY TESTS EVERY THREE MONTHS IN INDIA SAYS RAO

The Indian Insurance Regulatory & Development Authority (IRDA) plans to monitor the solvency of insurers on a quarterly basis from next January 1 to ensure that the detariffing of the motor industry is not having a negative impact on insurers’ finances, according to CS Rao, IRDA’s chairman, speaking on the sidelines of the recent Asian Life Insurance Summit. Although a significant jump in the price of policies is expected, given that motor insurance has suffered a loss ratio of well over 100% in past years, an influx of new players could keep price increases restricted. Bharti- Axa is expected to enter the non-life sector once detariffing is implemented. Meanwhile, Mr Rao also warned the life sector that it should be cautious about transplanting sophisticated products from developed markets to India, where the contribution of insurance to gross domestic product remained at around 1.5%, half the Asian average of 5.16%. He anticipated that India could be on a par with the Asian average within about five or six years.