IFSCA Proposes Special Purpose Vehicles for Insurance-Linked Securities to Diversify Risk

The International Financial Services Centres Authority (IFSCA) plans to establish special purpose vehicles (SPVs) to issue insurance-linked securities, including catastrophe bonds, aiming to diversify insurance risk beyond traditional reinsurance. Chairman K. Rajaraman stated that private equity and institutional investors could participate in risk-sharing, enhancing industry stability. The IFSCA will soon propose a regulatory framework to the government, with progress expected within two months, followed by consultations and potential legislative changes to operationalize these instruments.