Financial Awareness - Risk, Stability & Emerging Finance
Under IRDAI regulations, what is the minimum solvency margin that insurance companies must maintain?
Under IRDAI regulations, what is the minimum solvency margin that insurance companies must maintain?
medium Q7 of 15
Step-by-Step Solution
Step 1: Understand solvency margin concept
Solvency margin is the excess of assets over liabilities to ensure insurer’s financial health.Step 2: Analyze options
It is not a fixed percentage of premium or equal to sum assured; it is a margin ensuring ability to meet liabilities.Final Answer:
A margin to ensure ability to meet future liabilities → Option BQuick Check:
Solvency margin = Ensures insurer meets future liabilities ✅
Quick Trick: Remember solvency margin safeguards insurer’s financial stability.
Common Mistakes:
- Confusing solvency margin with premium or sum assured amounts.
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