International Financial Services Centres Authority (IFSCA or Authority) vide its Press Release dated November 21, 2022 has sought comments / suggestions from general public and stakeholders on the proposed IFSCA (Investment by International Financial Service Centre Insurance Office) Regulations, 2022 (“Proposed Regulation”).
Background – IFSCA in accordance with Section 27 of the Insurance Act, 1938, proposes to enact a comprehensive regulatory framework on Investment by IFSC Insurance Office (IIO). The Proposed Regulations provides for manner and process of investments by IIO in various global jurisdiction including in India.
The key provisions as mentioned under Proposed Regulation are as below:
- The Proposed Regulations shall be applicable to IIO incorporated, not incorporated in an IFSC and IIO established as branch of Foreign insurer or Lloyd’s India .
- IIO not incorporated in an IFSC or IIO established as branch of Foreign insurer or Lloyd’s India may choose to follow norms applicable to its parent entity.
- The Proposed Regulations specifies key definitions such as accounting standard, financial assets, financial derivative, group, infrastructure assets, investment etc.
- IIO to have Board approved Investment Policy which shall inter-alia provide for situations of breaches and action plans to address thereto, provisions for providing Economic Capital, if required.
- IIO shall earmark, invest and at all times keep earmarked and invested, assets of value not less than that of its liabilities.
- IIO established as a place of business of Indian insurer/ Indian Re-insurer shall invest assigned capital in accordance with the regulatory requirements applicable in its home country.
- Not more than 5% of the assets can be invested in a Company or body corporate owned & controlled by promoters.
- While dealing with Banks, IIO shall ensure that the Bank has operations in 5 or more countries, rating is not below 2 from banking regulator of home country and has total assets of US$ 100 billion.
- The assets can be invested in IFSC, in India, country where its Parent Entity is incorporated and country not listed under high risk jurisdiction by Financial Action Task Force.
- In case of relocation of IIO from another country to IFSC, regulatory framework on investment of Assets of said country in respect of the premium sourced therefrom shall be followed.
- Investments can be made out of funds maintained in Parent Entity Account, shareholders’ funds representing solvency margin and policyholder’s funds in accordance with applicable regulations.
- Investments shall be made only in Assets rated as Investment Grade under Insurance Capital Standards – Rating Categories (ICS-RC) by international rating agencies recognized by the International Association of Insurance Supervisors (IAIS).
- The Proposed Regulations also prescribes matrix classifying types of investment asset and maximum exposure which can be undertaken by the IIO.
- IIO shall ensure governance requirements as specified under the Regulations.
- The Proposed Regulation requires IIO to comply with the requirements as prescribed within 6 months from the date commencement of the Regulations.
Source category: IFSC Insurance Office
Attachments
- /2022/113_IFSCA(~11.PDF
Comments are closed