Insurers warned to be more cautious on mortgages

The Financial Services Commission has urged insurance companies to be more cautious while lending money (mortgage), and pay attention to the integrity of the borrower, Defi Media reported, citing latest guidelines issued by the regulator.

The ‘Guidelines for Mortgage Underwriting Practices and Procedures’ – to be effective as from July 1, 2021 – is said to provide a regulatory framework in order to supervise mortgages underwritten by insurers. 

In the document addressed to insurance companies, FSC Chief Executive Dhanesswurnath Thakoor, Chief Executive urged them to have a comprehensive Mortgage Underwriting Policy and also perform“reasonable due diligence to record and adequately assess the borrower’s identity, background and willingness to service their debt obligations on a timely basis.”

It has also asked insurers to have sound collateral management and appraisal processes for the underlying mortgage properties, together with effective credit and counterparty risk management practices. 

The Guidelines also embed internal control, monitoring and reporting mechanism by spelling out the role and responsibilities of the Board and of Senior Management of insurers.