The report has acknowledged transition plans towards a risk-based approach in the insurance sector

Indian Insurance Industry should move towards risk-based solvency/supervision frameworks and further steps should be taken in this regard in regulation, according to a joint study by IMF and World Bank. 

The latest report on the Financial Sector Assessment Program (FSAP), a joint program of the International Monetary Fund (IMF) and the World Bank (WB), has acknowledged transition plans towards a risk-based approach in the insurance sector, which reflects India’s commitment to global best practices and a resilient insurance sector, according to a release from Insurance Regulatory and Development Authority of India (IRDAI).

‘Strong and growing’

“The FSSA report acknowledges that India’s insurance sector is strong and growing, with a significant presence in both life and general insurance. The sector has remained stable, supported by better regulations and digital innovations,’‘ it said. 

The report noted that India’s progress in improving oversight, risk management and governance and suggested further steps toward risk based solvency/supervision frameworks and stronger group supervision. Risk-based solvency in insurance would allow insurers to hold capital proportionate to the risks they undertake to facilitate financial stability and protection of policyholders’ interests.

Published on April 9, 2025