The Insurance Regulatory and Development Authority of India (IRDAI) on 14th June 2022 has reduced the solvency margin requirement for Insurers doing crop business in order to increase the capacity of General Insurers to underwrite more business.
IRDAI has earlier granted relaxation on the period of admissibility of premium due from Government for solvency calculation purpose, from 180 days to 365 days which has now, been extended from FY 2022-23 onwards till further orders.
It is expected that the effect of this relaxation will be positive on the Industry as it will free up the capital, which can be utilized for underwriting more business. It is estimated that approximately Rs.1400 crores will be unlocked and General insurers may use this opportunity to optimize this freed up capital in a way which leads to increased insurance penetration in India.
