Insolvency requirement, cap on GWP challenges for surety contracts
1 year, 3 months ago

Insolvency requirement, cap on GWP challenges for surety contracts

Deccan Chronicle  

Chennai: The government had proposed the introduction of Surety Insurance Contracts to replace bank guarantees for businesses and projects. However, higher insolvency margin, cap on the share of Gross Written Premium are some of the challenges insurers face in providing SICs. The study wants the regulator to explore the possibility of treating the SIC business as a quasi-independent Strategic Business Unit within an insurance company with separate allocation of assets & liabilities and a stand-alone solvency requirement. “Since most insurers cede out a major part of the values at risk to reinsurers, using GWP as a measure of risk to cap the business sourced from SICs needs to be re-looked at. Net Written Premium can be a better measure of the risk that insurers are exposed to whilst writing SICs,” said Sanjay Pande, senior associate of Insurance Resource Group.

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Fresh capital for PSU general insurers likely in budget

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Live Mint  

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