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IFSCA – Informal Guidance on request from Applicant in relation to General Insurance Business as per

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  • IFSCA – Informal Guidance on request from Applicant in relation to General Insurance Business as per

The International Financial Services Centres Authority (“IFSCA / Authority”) has issued an Informal Guidance by way of interpretative letter dated 17 December 2025, under the IFSCA (Informal Guidance) Scheme, 2024 (“Informal Guidance”) providing clarifications on the classification of reinsurance business under the IFSCA’s regulatory framework on insurance, particularly in the context of overseas direct investment (ODI) by Indian entities.

Background:

  • The Informal Guidance Scheme enables market participants to seek interpretative guidance from IFSCA on the application of the regulatory framework administered by the Authority.
  • The Applicant proposes to establish a wholly owned subsidiary as an IFSC Insurance Office (“IIO”) in GIFT-IFSC to exclusively undertake re-insurance of general insurance business.
  • Accordingly, the Applicant approached IFSCA and sought informal guidance on whether the proposed activity of transacting re-insurance business of general insurance falls within the ambit of “general insurance business” under the regulatory framework of IFSCA. This clarification was sought to support consideration under the overseas investment framework, referencing Clause 2(2) of Schedule I of the FEMA (Overseas Investment) Rules, 2022 (“FEMA Investment Rules”) along with relevant provisions of the Insurance Act, 1938 and IFSCA (Re-insurance) Regulations, 2023.
  • Based on the facts presented by the Applicant, IFSCA’s Division of Insurance Regulations (DoIR) issued the Interpretative Letter dated 17 December 2025, setting out its views on the applicability of the extant regulatory framework.

Submission by Applicant:

In the Request Letter the applicant submits the following:

  • Clause 2(2) of Schedule I of the FEMA Investment Rules, generally restricts ODI in insurance but has a proviso allowing an Indian entity (not engaged in insurance in India) to make ODI in general and health insurance if it supports the core activity overseas.
  • Applicant sought clarification that whether the proposed reinsurance of general insurance business falls within the ambit of “general insurance business” under IFSCA’s regulatory framework.
  • Also, given the exclusive jurisdiction of the Authority over financial services in the IFSC, GIFT City (under Section 44A of FEMA) such classification is intended to be the basis for its consideration under the overseas investment framework.

Clarification by Authority:

Authority referred to Section 2(9)(a), 2(7A)(c), 2(6B), 2(6C), 2(16B) and Section 6 of the Insurance Act, 1938 along with Regulation 3(1)(o) of the IFSCA (Re-insurance) Regulations, 2023 and provided the following reasoning:

  • Under the Insurance Act, 1938 “General insurance business” includes fire, marine, or miscellaneous insurance (Section 2(6B)) and “Re-insurance” is defined as the insurance of part of one insurer’s risk by another (Section 2(16B)). The relevant excerpts are as follows:

Section 2(6B) – General insurance business


General insurance business means fire, marine or miscellaneous insurance business,
whether carried on singly or in combination with one or more of them;

Section 2(16B) – Re-insurance


Reinsurance means the insurance of part of one insurer’s risk by another insurer who
accepts the risk for a mutually acceptable premium;

  • Accordingly, Regulation 3(1)(o) of IFSCA (Re-insurance) Regulations, 2023 defines insurance and reinsurance segments transacted by IIO, out of 15 insurance segments allowed for IIOs except for the Life Insurance segment, all other insurance segments fall under the purview of general insurance business as defined under Section 2(6B) of Insurance Act. The relevant excerpt is as follows:

Regulation 3(1)(o) – Insurance Segment


Insurance segment, for the purpose of these regulations, means insurance or re-insurance
business transacted by an IIO in any one or more of the following segments:

  1. Fire (Other than Oil & Energy);
  2. Marine Hull;
  3. Marine Cargo;
  4. …
  5. Any other segment as may be specified by the Authority from time to time.
  • In view of the above, the Authority stated that reinsurance business may be carried on for life, general, or health insurance segments. Therefore, the proposed activity of transacting reinsurance business of general insurance only, falls within the ambit of “general insurance business” under the regulatory framework of IFSCA on insurance.

Further, the Authority has clarified that the views expressed in the Informal Guidance are based on the facts and information provided by the Applicant. The Authority also noted that different facts or circumstances may result in a different interpretation.

The informal guidance is limited to the clarifications sought by the Applicant in relation to the applicable IFSCA insurance regulatory framework and does not affect the applicability of any other laws, regulations, guidelines or circulars administered by IFSCA or any other authority.

A copy of the Informal Guidance along with the request letter of Applicant is attached herewith for your ready reference.

Source category: IFSC Insurance Office

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