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CS Professional · IFSCA - Regulations, Listing and Compliances · Insurance and Reinsurance

Suraksha Re Ltd, a company registered as an insurer in the GIFT IFSC, wants to know how its solvency position is judged by the IFSCA. Which statement best describes the requirement it must observe on an ongoing basis?

An IFSC insurer must keep its available solvency margin at or above the required solvency margin continuously and report the position to IFSCA as prescribed. Solvency is an ongoing prudential safeguard for policyholders, not a one-time registration test or a periodic check.

  1. AIt must maintain available solvency margin at or above the required solvency margin at all times, and report the position to the IFSCA as prescribedCorrect
  2. BIt needs to meet the solvency requirement only on the date of registration, after which no further tests apply
  3. CIt must meet solvency norms only if it writes direct life business, not reinsurance
  4. DIt must maintain solvency only at the end of each five-year period

Explanation

Solvency is a continuing prudential requirement: the available margin must not fall below the required margin, and the insurer reports its position to the regulator. A one-time test at registration or a five-year test would defeat the purpose of ongoing supervision. Solvency norms are not limited to direct life business.

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