Let’s Connect

Exposure Draft of IRDAI (Registration of Indian Insurance Companies) Regulations-2022

  • Regulatory Updates
  • Exposure Draft of IRDAI (Registration of Indian Insurance Companies) Regulations-2022

IRDAI has issued an Exposure draft on IRDAI (Registration of Indian Insurance Companies) Regulations dated October 13, 2022 with an objectives of simplifying the registration process for an insurance Company and to specify the fit and proper eligibility criteria of an applicant.

Highlight of the key changes is as follows:

  • No company or co-operative society shall be incorporated in India with a name that contains words ‘insurance’ or ‘assurance’ or ‘reinsurance’ without obtaining a No-objection Certificate from the Authority.
  • In addition to the Companies defined under section 2(20) of Companies Act, 2013 or statutory bodies established by an Act of Parliament, the Co-operative societies are also permitted to carry on insurance business as per proposed Regulation
  • Following new definitions are introduced in the Draft Regulation.
  • Foreign Promoters
  • Private Equity Fund” or “PE Fund
  • Special Purpose Vehicle” or “SPV
  • A subsidiary Company as defined under section 2(87) of Companies Act, 2013 may be allowed to be a promoter of the applicant (insurance Company) if it meets the conditions mentioned under regulation 4(2) of Draft Regulation
  • Non-Operative Financial Holding Company registered with Reserve Bank of India is allowed to be an Indian promoter for an applicant.
  • List of Permissible Classes of Insurance Business is amended by inserting “any other class of business as may be specified by the Authority”.
  • Timelines for disqualification of application on account of rejection of application by the Authority or withdrawal of application by applicant has been increased from 2 years to 5 years.
  • In addition to the disqualification criteria for applicant, the draft regulation also specifies the disqualification criteria of person to be a promoter of an applicant, as detailed under regulation 4(2) of Draft Regulation
  • The Private Equity funds may invest in the applicant in the capacity of promoter or investor in the manner as specified under Regulation 6(8)
  • Requirement of affidavit certificate from Foreign Investment Promotion Board (FIPB) in case of 26% FDI has been waived off.
  • In case the applicant is promoted by a Special Purpose Vehicle or a Non-operative Financial Holding Company (NOFHC), the conditions stated in Regulation 6(3) shall be complied
  • The equity shares of the applicant on the date of grant of Certificate of Registration shall be locked-in for the period as detailed under Regulation 6 of draft regulation
  • Investment in the capacity of promoter, directly or indirectly, in an Indian insurer shall be in compliance with the following conditions stated in Regulation 6(5)
  • The person shall not be a promoter of more than one life insurer, one general insurer, one health insurer and one reinsurer;
  • The person shall submit an undertaking to infuse capital in the insurer to meet its solvency/business requirements, if any, in future.
  • The person is otherwise eligible to be the promoter of the insurer under these Regulations.
  • In accordance with the requirement of Resident Indian citizenship for Directors, Key Management Persons (KMP’s) insurer having foreign investment a majority of its directors, majority of its KMP’s and at least one among the chairperson of its Board, its MD and its CEO, shall be Resident Indian Citizens
  • In an Indian Insurer having foreign investment exceeding forty-nine per cent following shall be complied:
  • for a financial year for which dividend is paid on equity shares and for which at any time the solvency margin is less than 1.2 times the control level of solvency, not less than fifty percent of the net profit for the financial year shall be retained in general reserve; and
  • Not less than fifty per cent of its directors shall be independent directors, unless the Chairperson of its Board is an independent director, in which case at least one-third of its Board shall comprise of independent directors
  • Minimum amount for calculation of annual fee is proposed to be increased from Rs. 5 lakh to Rs. 10 lakh.
  • Fee for issuance of duplicate certificate is proposed to be increased from Rs. 5 thousand to Rs. 1 Lakh
  • Existing IRDAI (Registration of Indian Insurance Companies) Regulations, 2000, as amended from time to time, shall be repealed from the date the (draft) Regulations come into force

Source category: IRDAI

Attachments

  • /2022/94_CIRCUL~12.PDF
  • /2022/94_EXPOSU~12.PDF

Comments are closed