IFSCA (Manner of Payment and Receipt of Premium) Regulations_ 2022

International Financial Services Centres Authority (IFSCA or Authority) vide ref. no. IFSCA/2022-23/GN/REG032, has published the “IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022” [“Regulations”] on January 14, 2023. The said Regulations shall come into force on the date of their publication in the Official Gazette.

Objective – To put in place the manner of payment of premium for insurance policy, assumption of risk, receipt or refund of premium and other terms and conditions, in accordance with Section 64 VB of the Insurance Act, 1938, for carrying on the insurance business in IFSCA

Major highlights of the Regulations are as follows:

• The Regulations specifies certain key definitions such as; grace period, premium, cash deposit and premium payment warranty clause etc.
• The proposer or a policyholder may pay premium to an IIO through following manners:
• recognised instrument of payment using banking channels including payment made through electronic mode; bank guarantee or equivalent instrument issued by any bank in favour of the IIO for payment of premium, in case the insured fails to make such payment; cash deposit; or any other method or manner of payment as may be specified by the Authority.
• An IIO may assume the risk, continue to assume the risk or terminate any assumption of risk, subject to satisfaction of the conditions specified under these Regulations.
• With the mutual consent of IIO and prospect/ policyholders, premium may be paid in instalments.
• The contract of insurance inter-alia shall specify the following:
• the manner and time schedule of payment of premium in full or in instalments; grace period, if any and consequence of non-payment of premium within such grace period; conditions for the revival of lapsed policy, if any; date of commencement of risk ; date of termination of risk upon non-payment or non-realization of premium taking into account the line business, duration of the insurance policy; Premium Payment Warranty clause, if any, as agreed upon by the IIO and the Insured; and any other information as may be specified by the Authority from time to time.
• The Regulation prescribes provisions pertaining to payment of premium for contracts of Reinsurance as follows:
• The risk may be assumed without payment of premium in advance on insurances accepted under automatic reinsurance contracts;
• For facultative reinsurance, risk may be assumed without payment of premium in advance in accordance with the terms of the Premium Payment Warranty clause, if incorporated in the contract of insurance;
• Reinsurers shall have systems in place to ensure that all premiums receivable are duly received and accounted for.
• Any refund of premium shall be directly credited to the accounts of insured only and in no case it shall be credited into the account of the Agent.
• An IIO shall have a Board approved policy on mitigation of credit risk, inter-alia, indicating therein the downsides of non-payment of premium by the insured.
• An IIO operating in an IFSC prior to the commencement of these regulations, shall comply with the additional requirements specified in these regulations, within a period of six months from the commencement of these regulations.

Source category: IFSC Insurance Office

Attachments

• /2023/147_IFSCA_(Manner_of_Payment_and_Receipt_of_Premium)_Regulations,_2022.pdf