Economics · Economy
What is the single most critical prudential measure mandated by the Insurance Regulatory and Development Authority of India (IRDAI) that directly ensures an insurance company's ability to pay all future claims and expenses, even under adverse circumstances?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Mandatorily investing all premium income exclusively in Government Securities (G-Secs) to eliminate credit risk.
- 2Maintaining a Solvency Margin, which requires the insurer's Available Solvency Margin (ASM) to be constantly above the Required Solvency Margin (RSM) with a minimum control ratio of 150%.✓
- 3Achieving a specific minimum volume of Gross Written Premium (GWP) collection annually.
- 4Maintaining a high percentage of Non-Performing Assets (NPAs) in the investment portfolio.
Correct answer
Maintaining a Solvency Margin, which requires the insurer's Available Solvency Margin (ASM) to be constantly above the Required Solvency Margin (RSM) with a minimum control ratio of 150%.
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