Insurers seek greater flexibility in using equity derivatives for portfolio hedging

Mumbai : Insurance companies are seeking greater flexibility on how equity derivatives are used, including allowing exposure to the category to be aggregated across multiple funds instead of applying limits separately to each fund, people familiar with the matter told ET. Regulatory latitude could give insurers more room to hedge their overall equity portfolios, although adoption of the instruments has remained limited more than a year after the framework was introduced. Insurers are seeking changes to make derivatives more practical for long-term portfolio management , while the regulator is weighing the additional safeguards needed before allowing wider use of the instruments. Only one life insurance has used equity derivatives so far and the transactions involved one or two deals, said the sources cited above. In February 2025, the Insurance Regulatory and Development Authority of India allowed insurers to use equity derivatives solely to hedge existing equity exposures.