By IANS,
Kolkata: The Indian insurance industry does not have the statistical database to adopt Solvency II – new rules likely to change the way insurance companies keep aside capital required to cover risks, said a member of the country’s insurance regulator Thursday.
“We feel that our country does not have the statistical database as of now to adopt solvency II. I do not think we have taken a position whether we will be using solvency II or not,” R.K. Nair, member of Insurance Regulatory and Development Authority (IRDA), told reporters on the sidelines of Insurance Summit, organised by the Indian Chamber of Commerce (ICC) here.
Solvency II directives are part of the European Commission’s drive for a single European market and modernisation of regulations. The directives, applicable for all European Union-based insurers, will recast existing directives and rules on insurance prudential supervision into single risk-sensitive framework.
“We have a factor-based process in India to calculate solvency. Our regulator and the industry are comfortable with that. The moment we shift to solvency II, we may have to use internal risk based process. Such a model will start throwing up different sets of statistics,” Nair said.
He said the financial sector assessment programme (FSAP) was likely to be complete by the next year.
India has voluntarily sought a comprehensive FSAP by the World Bank and the IMF. All the regulators and the RBI conducted a self assessment of India’s financial sector in 2009.
But the World Bank will not accept the internal review and they were doing an FSAP again, Nair added.
The review is mainly aimed at assessing whether the regulatory norms in the country are meeting the international standards.