**Executive Summary**
This document is the answer to Unstarred Question No. 42 in Lok Sabha, dated December 1st, 2025, regarding strengthening the insurance regulation framework. It addresses the Government's actions concerning a study report on Insurance Guarantee Schemes (IGSs) and proposed amendments to the IRDA Act, 1999. The reply indicates that the matter is under consideration by the Government, and proposed amendments are being drafted.
**Key Points / Main Content**
* **Study Report on Insurance Guarantee Schemes (IGSs):**
* The study report from the Seoul Center for Finance and Innovation, World Bank focuses on creating IGSs based on international best practices.
* The aim is to protect policyholders and maintain public confidence and stability in the insurance sector.
* **Insolvency Mechanism:**
* India has a mechanism in place to address the occurrence of insolvency of insurance companies, according to IRDAI.
* This mechanism includes maintaining a minimum solvency margin and sufficient reserves for reported and unreported liabilities/claims, as well as reserves for future estimated claims.
* The country has solvency norms, investment regulations, and policyholder protection regulations in place.
* **Amendment of IRDA Act, 1999:**
* The amendment of the IRDA Act, 1999 is among the proposed amendments to the Insurance Laws being considered by the Government.
* International best practices and regulatory frameworks have been analysed and incorporated while drafting the proposed amendments.
**Impact Analysis**
**Insurance Policyholders**
* **Impact:** The IGSs aim to protect policyholders and maintain public confidence and stability in the insurance sector.
* **Action Required:** None specified.
**Insurance Companies**
* **Impact:** They are subject to solvency norms, investment regulations, and policyholder protection regulations.
* **Action Required:** They should adhere to the existing mechanisms and upcoming amendments to IRDA Act.
**Insurance Regulatory and Development Authority of India (IRDAI)**
* **Impact:** The IRDA Act, 1999 is undergoing proposed amendments and must work in accordance.
* **Action Required:** Review the proposed amendments to ensure effective implementation and compliance.
Key Entities Referenced
IRDA Act, 1999: Insurance Regulatory and Development Authority Act, 1999, being considered for amendment to strengthen insurance regulation.
Ministry of Finance: The ministry responsible for the regulation of the insurance sector.
Insurance Regulatory and Development Authority of India (IRDAI): The regulatory body for the insurance sector in India.
"Establishing Efficient and Effective Insurance Guarantee Schemes": A study report focusing on the creation of Insurance Guarantee Schemes (IGSs).
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION No. 42
ANSWERED ON MONDAY, 1st DECEMBER, 2025/AGRAHAYANA 10, 1947 (SAKA)
Strengthening of Insurance Regulation Framework
42. SHRI PARSHOTTAMBHAI RUPALA:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government has taken any action on the representation regarding the Study Report
from the Seoul Center for Finance and Innovation, World Bank’s Finance Division, titled
“Establishing Efficient and Effective Insurance Guarantee Schemes”;
(b) if so, the details thereof;
(c) whether the Government proposes to revise or amend the Insurance Regulatory and
Development Authority (IRDA) Act to strengthen the regulation of the insurance sector; if so, the
details thereof; and
(d) whether the Government has taken any action on the representation submitted for legislative
analysis of IRDA; and
(e) if so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) and (b): The Study Report on ‘Establishing Efficient and Effective Insurance Guarantee
Schemes’ focuses on creation of Insurance Guarantee Schemes (IGSs) based on international
best practices, with a view to protect the policyholders and maintain public confidence and stability
in the insurance sector.
As per the Insurance Regulatory and Development Authority of India (IRDAI), the mechanism to
address occurrence of insolvency of insurance companies is in place in India which includes
maintenance of minimum solvency margin, maintenance of sufficient reserves for reported as well
as for incurred but not reported liabilities/claims and reserves for future estimated claims. Thus, the
solvency norms, investment regulations and policyholder protection regulations are in place in the
country in this regard.
(c) to (e): Amendment of IRDA Act, 1999 is a part of the proposed amendments to the Insurance
Laws which are under consideration of the Government. Further, the international best practices
and regulatory frameworks of various countries have been analysed and incorporated while
drafting the proposed amendments
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