Insurance regulator Irda on Wednesday proposed to allow insurers to hedge their interest rate risks with long term financial derivative instruments including forward rate agreements and interest rate swaps.
The insurers, as per the draft guidelines on 'fixed income derivates' issued by the Insurance Regulatory and Development Authority (Irda), will also be allowed to hedge their long term interest rate risks through exchange traded interest rate futures.
As per the existing guidelines, the insurance companies can hedge their risks through derivative instruments with a maturity period of up to one year only.