Ajeet Madhavrao Gopchade, a Bharatiya Janata Party Member of Parliament in the Rajya Sabha, has actually asked Prime Minister Narendra Modi to develop a statutory defense system for private insurance coverage policyholders so that if a life insurance coverage business declares bankruptcy or deals with insolvency, insurance policy holders have defense to draw on.
In a letter outdated September 25, 2026, to the PM, Gopchade has actually recommended producing a statutory insurance policy holders’ security plan with different plans for life and long-lasting and basic insurance coverage.
The MP has actually likewise recommended producing a system that can make sure the connection of life insurance coverage policies through the prompt transfer of practical portfolios to another insurance company. Or in cases, where essential, to develop an organized run-off system, supported by proper resolution and liquidity plans.
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“For countless households, a life insurance coverage policy is not simply a monetary item however represents long-lasting cost savings, household defense and retirement security; subsequently, guaranteeing connection of cover and securing genuine insurance policy holder advantages in case of insurance provider failure is worthy of cautious factor to consider,” Gopchade composes in the letter.
In his letter, the BJP Rajya Sabha MP has actually likewise provided examples of nations such as the UK, USA, Canada, Australia and Hong Kong to highlight how they have actually brought resolutions to secure the rights of insurance coverage policyholders and how the Department of Financial Services can analyze their viability in India’s context.
BJP MP raised concern in Rajya Sabha in February 2025
Gopchade stated that he had actually likewise raised the concern relating to ‘protecting the financial investments of insurance policy holders’ in a starred concern in the Rajya Sabha on February 11, 2025.
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The concern inquired relating to the actions required to protect insurance policy holders’ financial investments if a life insurance coverage business deals with insolvency, whether the federal government had actually examined global regulative practices, the supervisory function of the Insurance Regulatory and Development Authority (IRDAI) and the regulative instructions and restorative steps provided to life insurance coverage business throughout the preceding 3 years, the MP composes.
What federal government stated in Rajya Sabha
Gopchade stated that the federal government’s action highlighted essential safeguards currently offered under the Insurance Act, 1938, and IRDAI policies, consisting of the separation of insurance policy holders’ and investors’ funds.
The MP states that the federal government’s reply likewise highlighted recommended solvency requirements, financial investment standards, routine danger evaluation and compliance audits, routine returns and public disclosures, in addition to IRDAI’s off-site and on-site supervisory structure.
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The reaction likewise specified that the appropriate regulated level of solvency is currently 150% of the needed solvency margin, the MP composes.
What is Gopchade‘s issue in spite of policyholder-related safeguards in location
Gopchade states the essential policy concern is whether these prudential safeguards ought to be matched by a devoted insurance policy holder defense and orderly-resolution system that would run if, regardless of regulative guidance, an insurance provider were to end up being economically distressed or insolvent.
BJP MP highlights worldwide practices for insurance policy holders’ safeguards
Gopchade states an evaluation of worldwide experience shows that numerous significant insurance coverage markets have actually developed devoted systems, normally referred to as Policyholders’ Protection Schemes, Insurance Guarantee Schemes or Guaranty Associations, to supply an extra layer of security in case of insurance company failure.
“The relative product recognizes the United States, United Kingdom, Singapore, Australia and Canada amongst jurisdictions with such plans. Typical functions consist of insurer-funded systems, specified protection, distinguished treatment of long-lasting and basic insurance coverage, and the plans for the extension or the transfer of long-lasting policies,” composes Gopchade in his letter to the PM.
What Gopchade desires federal government to do for insurance coverage policyholders
Gopchade states the federal government needs to think about analyzing the expediency of a thorough insurance policy holders’ security and insurance provider resolution structure for India. His ideas consist of-
· Establish a statutory insurance policy holders’ security scheme/fund with different plans for life/long-term and basic insurance coverage, moneyed through a suitable market levy.
· Ensure the connection of life insurance coverage policies through the prompt transfer of practical portfolios to another insurance provider or, where needed, an organized run-off system, supported by suitable resolution and liquidity plans.
· Strengthen the legal structure for insurance company insolvency through early intervention, plainly specified insurance policy holder protection/compensation, and proper healing systems, consisting of an evaluation of the Insurance Act, 1938, and associated insolvency arrangements.
“I for that reason humbly demand that the Department of Financial Services, in assessment with the IRDAI and other appropriate stakeholders, might kindly carry out a comprehensive country-wise and legal research study of insurance policy holder security systems in the United States, United Kingdom, Singapore, Australia, Canada and Hong Kong, and analyze their viability for India,” Gopchade recommends in his letter.