Insurance Regulatory and Development Authority of India (IRDAI) has identified three insurance companies as Domestic Systemically Important Insurers (D-SIIs) for the fiscal year, 2020-21. The move is an extension of the same stature.

Those are state-backed entities including Life Insurance Corporation of India,

and , the insurance regulator said in a release on Thursday.

D-SIIs refer to insurers of such magnitude whose distress or failure would cause “a significant dislocation in the domestic financial system”. Those companies should have global and local inter-connectedness.

In line with the Reserve ’s benchmarking D-SIIs are perceived to be “too big or too important to fail’ (TBTF). This entails any form of government support at the time of crisis in future.

For example, LIC of India is the largest domestic institutional investor betting on local debt and equities. It is estimated to have an asset size of over Rs 38 lakh crore. In July, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval for the listing of LIC.

“The continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy,” IRDAI said.

Given the nature of their operations and the systemic importance of the D-SIIs, these insurers have to drive their efforts to raise the level of corporate governance while assessing all relevant risks.

They should promote a sound risk management framework and culture, according to IRDAI.