CHENNAI: The Union Finance Ministry has urged different ministries to not embrace solvency ratio standards to authorities owned non-life insurers to take part within the tenders for common insurance coverage wants.

In an Workplace Memorandum, the Division of Monetary Companies underneath the Ministry of Finance requested different Ministries to not embrace solvency ratio as a criterion for participation of public sector common insurers in tenders.

“This is able to improve competitors within the bidding course of with out compromising on the standard of companies. It is usually requested to convey this to the eye of all of the procuring entities and organisations underneath the executive jurisdiction of your Ministry/Division, ” the communication mentioned.

In accordance with the Division of Monetary Companies, three authorities owned non-life insurers – Nationwide Insurance coverage Firm Ltd, Oriental Insurance coverage Firm Ltd and United India Insurance coverage Firm Ltd – shouldn’t have the stipulated solvency ratio of 1.5 of the liabilities.

Some central public sector corporations and authorities departments embrace the required solvency ratio as an eligibility situation of their tenders.

Declaring that the insurance coverage sector regulator has allowed forbearance to the three corporations from sustaining the solvency ratio and allowed them to underwrite enterprise.

“It’s pertinent to notice that the reinsured legal responsibility shouldn’t be factored into calculation of Solvency Ratio, specified by IRDAI (Insurance coverage Regulatory and Growth Authority of India), because of which solvency ratio of 1.5 may be very excessive from a threat perspective, ” the Workplace Memorandum notes.

Additional, the federal government owned non-life insurers haven’t defaulted ever on their liabilities. The Authorities of India has lately infused capital within the above-mentioned corporations and stands dedicated to supply extra capital, as could also be required, the Division of Monetary Companies advised different Ministries.