The Insurance Regulatory and Development Authority (Irda) has asked the actuaries of domestic insurance companies to develop a new definition on lapsation of insurance policies.
Addressing the 10th global conference of actuaries in Mumbai on Thursday, the Irda chairman, CS Rao, said that different insurance companies had different definitions of lapsation of policies, which often caused confusion. Rao also asked the actuaries to coin a thorough definition of first year premium so that there was uniformity in its definition across the sector. He expressed concern over expenses being incurred by insurers. ?The expenses by insurers are on the higher side which need to be lowered,? he said.
?The actuaries should prepare a proper definition of the terms acceptable to all the insurers,? he said.
Commenting on solvency ratio for the insurers, Rao said that this needs to be converted to a risk-based capital. By doing so, the insurers will be able to manage risks in an effective manner, said Rao, adding that it was common in other countries.
