Exemptions to the insurers from Insurance Act_ operating in SEZ and IFSC

Ministry of Finance (Department of Financial Services) has published a notification bearing no. CG – DL – E- 04072022-237034 dated July 4, 2022 granting certain exemptions to the insurers operating in Special Economic Zone (SEZ) and International Financial Services Centre (IFSC) from certain provisions of Insurance Act,1938.

The major highlights of the Notification are as follows:

• In SEZ and IFSC, following sections of Insurance Act will not be applicable to the insurers:-

Sections

Description

29

Prohibition of loans

32B

Insurance business in rural and social sectors

32C

Obligations of insurer in respect of rural or unorganised sector and backward classes

32D

Obligation of insurer in respect of insurance business in third party risks of motor vehicles

64D – 64R, 64ULA

Provisions pertaining to Life Insurance Council and General Insurance Council and Committees

101A

Re-insurance with Indian re-insurers

101B

Advisory Committee

101C

Examination of re-insurance treaties

105B

Penalty for failure to comply with sections 32B, 32C and 32D

110F

Provisions applicable to State Governments, etc.

118

Exemptions

120

Determination of market value of securities deposited under this Act

• The notification also provides with certain provisions of Insurance Act that shall apply in IFSC with exceptions, modifications and adaptations, as briefly enunciated below:-
• Authority:-

As per section 2A of the Insurance Act, Authority means the Insurance Regulatory and Development Authority of India (IRDAI), However, it shall also include the International Financial Services Centres Authority,”

• Investment:-

Sections 27, 27A, 27B, 27C, 27D and 27E of the Insurance Act pertaining to Investments shall be substituted with revised Section 27 – Investments of Assets

c) Section 64VB of the Insurance Act for sub-sections (1), (2) and (3) , the following sub-sections shall be substituted namely: —

“(1) No insurer shall assume any risk in respect of any insurance business until and unless—

(a) the premium payable is received by him; or

(b) the premium payable is guaranteed to be paid by such person, in such manner and within such time as the Authority may specify by regulations; or

(c) the deposit of such amount as the Authority may specify by regulations is made in advance for adjustment towards premium; or

(d) payment of premium to be made in any other form by the prospective policyholder is agreed upon between him and the insurer, in such manner as the Authority may specify by regulations.

(2) Any refund of premium which may become due to an insured on account of cancellation of a policy or alteration in its terms and conditions or otherwise, shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order or by such other means as may be specified by the Authority by regulations, and a proper receipt therefor shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.”;

• Power of Authority
• 114A. (2) (i) shall be modified and under this notifications, regulation can be made to set the time, manner and other conditions of investment of assets by an insurer.
• Manner of Receipt of Premium

Regulation can be made to determine the manner and time for payment of premium under and other means of payment of refund to the insured under sub [1] section 64VB.

Source category: Others

Attachments

• /2022/62_2022-07-04_Exemptions_to_the_insurers_from_Insurance_Act__operating_in_SE.pdf