Context:
The Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies to conduct a Quantitative Impact Study (QIS 2) as part of the transition to a Risk-Based Capital (RBC) regulatory framework for the Indian insurance industry.
Quantitative Impact Study (QIS)
A Quantitative Impact Study (QIS) is a regulatory exercise conducted by IRDAI to assess the impact of proposed regulatory changes—specifically the Risk-Based Capital (RBC) framework—on Indian insurance companies.
- Purpose: To evaluate solvency requirements and capital adequacy under a risk-sensitive approach.
- Replaces the traditional fixed-solvency margin system with a framework aligned to global standards.
Key Objectives of RBC Framework
- Principle of RBC: Insurers will hold capital proportionate to the risks they undertake, including investment, underwriting, operational, and market risks.
- Objective: Strengthen financial stability, enhance policyholder protection, and support globalisation of India’s insurance industry.
- Moves Indian insurers closer to international solvency norms.
