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New Year Gift by IRDA- Solvency Margins for ULIPs Slashed by 20 percent

Anurag Bhullar


A 20 percent cut in solvency margins for ULIPs by IRDA (Insurance Regulatory and Development Authority), has come as a New Year bonanza for the insurers. IRDA has also slashed the solvency margins by 10 percent for guaranteed return products. This move by IRDA is expected to achieve a capital release of over Rs 1000 crore for insurers in this year.


IRDA has instructed all the insurance companies to decrease the solvency margin for ULIPs to 0.8 percent from 1 percent. Similarly on Guaranteed return plans they are asked to bring down the solvency ratio to 1.8 percent from existing 2 percent.


Apart from this reduction for ULIPs and guaranteed return plans, IRDA has also slashed the solvency margin for the sum assured for these insurance products to 0.2 percent from earlier margin of 0.3 percent.
 
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