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IBC revamp may bolster policyholder protection

Financial Express Mumbai

June 30, 2026

Insurers may have sector-specific framework for insolvency

- MANU KAUSHIK

THE GOVERNMENT IS examining a sector-specific insolvency framework for insurance companies under the Insolvency and Bankruptcy Code (IBC), similar to the one for the real estate sector.

Additional protection for insurance policyholders may be a key feature of the framework. Besides, the proposed changes might also clearly define the respective roles of the Insurance Regulatory and Development Authority of India (Irdai), the insolvency regulator Insolvency and Bankruptcy Board of India (IBBI) and the adjudicators — NCLT and NCLAT — for bankruptcy settlement in the sector.

However, insurance policyholders may not necessarily receive rights equivalent to homebuyers in the real estate insolvency regime. Homebuyers have had the tag of financial creditors since 2018 and a Supreme Court ruling in February this year further reinforced their position by stating that their claims would get precedence over that of others including lenders.

This story is from the June 30, 2026 edition of Financial Express Mumbai.

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