The government is developing a specialized insolvency framework for insurance companies under the Insolvency and Bankruptcy Code. This initiative aims to enhance policyholder protection and provide a clearer resolution process for distressed insurers, replacing older mechanisms under the Insurance Act. The move seeks to define the regulatory roles of the IRDAI, IBBI, and NCLT in handling insurance sector failures.
What Happened
The Indian government is working on a new framework to handle insolvency cases within the insurance sector. While insurance companies are classified as financial service providers under the Insolvency and Bankruptcy Code (IBC), the specific rules for their resolution have not been fully implemented. Currently, any…