IRDA (Insurance Regulatory Development Authority) has issued a circular dated 5th June, 2020 wherein it has mandated that all insurers and also corporate borrowers from insurance companies who have borrowed Rs.50 crores or more shall have to obtain Legal Entity Identifier, a 20 character unique identity code issued by Legal Entity Identifier India Ltd.
Legal Entity Identifier is a global reference number that uniquely identifies every legal identity or structure that is party to a financial transaction in any jurisdiction. The structure of the global LEI is determined in detail by ISO Standard 17442 and takes into account Financial Stability Board (FSB) stipulations.
At the time of the financial crisis of 2007–2008, regulators realised that a single identification code unique to each financial institution was not available worldwide. It means that each country had different code systems to recognize the counterpart corporation of financial transactions. Accordingly, it was impossible to identify the transaction details of individual corporations, identify the counterpart of financial transactions, and calculate the total risk amount. This resulted in difficulties in estimating individual corporation’s amount of risk exposure, analyzing risks across the market, and resolving the failing financial institutions. This is one of the factors that made it difficult for the early evolution of the financial crisis.
In response, the LEI system was developed by the 2011 G20 in response to this inability of financial institutions to identify organisations uniquely, so that their financial transactions in different national jurisdictions could be fully tracked.
IRDA circular can be found here