The Insurance Regulatory and Development Authority of India (“IRDAI”) has issued the Guidelines on Establishment and Closure of Liaison Office in India by an Insurance Company Registered Outside India (“Guidelines”), bearing Ref. No. IRDAI/F&I/GDL/MISC/27/02/2026, dated February 11, 2026.These Guidelines amend and supersede the earlier Guidelines on Establishment and Closure of Liaison Office in India by an Insurance Company Registered Outside India, bearing Ref. No. IRDAI/F&I/GDL/MISC/219/10/2022, dated October 17, 2022.The Guidelines have been issued under Section 14(1) of the IRDAI Act, 1999 and shall come into force with effect from the date of their issuance.
Key Highlights of the Guidelines
- Meaning of Liaison Office (LO)Guideline 1 defines a Liaison Office (“LO”) as:
- A place of office established to act as a channel of communication.
- Between the principal place of business or Head Office (“HO”) of an Overseas Insurer and entities in India.
- Which does not undertake any commercial, trading, soliciting or industrial activity, either directly or indirectly.
- Which maintains itself solely through foreign remittances received from the Overseas Insurer through normal banking channels.
- Eligibility Norms for Opening a Liaison Office
- The Overseas Insurer should have a profit-making track record during the immediately preceding three financial years in its home country and a minimum net worth of USD 65 million.
- Net worth means the aggregate of paid-up capital and free reserves, after deducting intangible assets, as per the latest audited financial statements.
- The Authority may relax the minimum net worth requirement considering bilateral trade significance and market development where the applicant is a foreign state-owned enterprise, reinsurer with a strong credit rating, or a specialized insurer.
- Application and Approval Process
- An Overseas Insurer intending to establish a LO shall submit Form IRDAI-FC-1 along with a non-refundable processing fee of USD 6,000 and other prescribed documents.
- The Authority may seek the views of the Ministry of External Affairs (MEA) where the applicant is situated in a country sharing land borders with India.
- An applicant may seek a review of the Authority’s decision within 30 days from the date of communication of rejection.
- The initial approval is valid for a period of three years. The LO must be established within six months from the date of approval; otherwise, the approval shall be deemed withdrawn.
- Guideline 3 further prescribes additional requirements relating to the application and approval process.
- Permitted Activities of a Liaison Office
- Representing the Overseas Insurer in India.
- Conducting market research and feasibility studies in the insurance sector.
- Acting as a communication channel between the Overseas Insurer and entities in India.
- Conditions for Approval
- The LO shall not undertake any activity other than those specifically approved by the Authority.
- All expenses of the LO shall be met through inward foreign remittances received from the Overseas Insurer via normal banking channels.
- The LO shall neither borrow nor lend funds nor accept deposits from any person in India.
- The Principal Officer (“PO”) in India shall act as the Nodal Officer and be responsible for ensuring compliance with the Guidelines and any directions issued by the Authority. Any change in the PO’s contact details shall be intimated to the Authority within 15 days.
- Guideline 5 also prescribes additional conditions that must be complied with by the LO.
- Books and Records to be Maintained
- The LO shall maintain only one bank account for all receipts and payments.
- Proper books of accounts and records relating to funds received from the HO and expenses incurred shall be maintained.
- A Balance Sheet, Statement of Income and Expenditure, and Statement of Receipts and Payments (Cash Flow Statement), duly signed by an independent Chartered Accountant (CA) and the Principal Officer, shall be submitted to the Authority within 60 days from the end of every financial year.
- Annual Activity Certificate (AAC)
- The LO shall submit an Annual Activity Certificate (AAC) issued by an independent Chartered Accountant (CA) or Company Secretary (CS), certifying compliance with Guideline 7(a).
- The AAC shall be submitted within 60 days from the end of each financial year along with details of research activities, studies undertaken, and reports shared with the Head Office during the reporting year, duly certified by the Principal Officer.
- Existing Liaison Offices shall also submit all prescribed returns, reports, and certificates under these Guidelines.
- Closure of Liaison Office
- An application for closure shall be submitted to the Authority at least two months prior to the expiry of the approval period.
- Guideline 8(c) specifies the documents and requirements to accompany the closure application.
- If an Overseas Insurer proposes to establish a Foreign Reinsurance Branch (FRB) or set up a Joint Venture (JV) or subsidiary for insurance operations in India, the existing LO must be closed upon obtaining such approval.
- An Overseas Insurer cannot simultaneously maintain a Liaison Office in India and act as a joint venture partner in an Indian insurance company.
- Action in Case of Default or Non-Compliance
- Guideline 9 specifies the circumstances under which the Authority may withdraw the approval granted to a Liaison Office.
- The Authority may also direct the Overseas Insurer to replace the Principal Officer and may inform the home country insurance regulator regarding the action taken against the Liaison Office.
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