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Liberalisation of Expenses of Management Limits and Linkage with Commission: Impact on the Insurance Industry

Introduction

Pursuant to Sections 40B and 40C of the Insurance Act, 1938 (“Insurance Act”), the Insurance Regulatory and Development Authority of India (“IRDAI”) is empowered to regulate and impose limits on the amount that insurance companies may spend on Expenses of Management[1] (“EoM”). Further, in terms of Section 40 of the Insurance Act, no insurer is permitted to pay, or agree to do so, to any insurance agent or intermediary, commission or remuneration in any form other than in the manner specified by the IRDAI through a regulation.Continue Reading Liberalisation of Expenses of Management Limits and Linkage with Commission: Impact on the Insurance Industry

Introduction

Vide an office memorandum dated November 29, 2022, the Department of Financial Services (Ministry of Finance), Government of India (“DFS”) has proposed extensive amendments to the Insurance Act, 1938 (“Act”) by way of the Insurance Laws (Amendment) Bill, 2022 (the “Amendment Bill”) in order to address the persistent demands of the insurance industry and to change some of the basic principles under the Act. The discussion on the overall nature of changes brought about by the Amendment Bill can be found in our blog post dated December 13, 2022.Continue Reading Looking Beyond Core Insurance Business: Insurers Allowed to Offer Value Added Services and Engage in Distribution of Other Financial Products

Highlights of the Master Circular on IRDAI (Registration of Indian Insurance Companies) Regulations, 2022

Introduction

Four months after the Insurance Regulatory and Development Authority of India (“IRDAI”) notified 2022 Regulations that streamline registration and share transfer requirements of Indian insurance companies, the IRDAI has issued a master circular titled ‘Master Circular on Registration of Indian Insurance Company, 2023’ dated April 24, 2023 (“Master Circular”) to supplement the procedural aspects of 2022 Regulations.Continue Reading Highlights of the Master Circular on IRDAI (Registration of Indian Insurance Companies) Regulations, 2022

Introduction

The Insurance Regulatory and Development Authority of India (“IRDAI”) has notified the IRDAI (Registration of Indian Insurance Companies) Regulations, 2022 (“2022 Regulations”), on December 8, 2022. The 2022 Regulations consolidate various prescriptions relating to registration of Indian insurance companies and the transfer of shares of such entities. Previously, such prescriptions were dispersed across multiple regulations, circulars, and guidelines such as the IRDAI (Listed Indian Insurance Companies) Guidelines, 2016, and the IRDAI (Investment by PE Funds in Indian Insurance Companies) Guidelines, 2017 (“2017 PE Guidelines”).Continue Reading IRDAI (Registration Of Indian Insurance Companies) Regulations, 2022 – A Step-Up for Private Equity Participants

Insurance Laws

Introduction

The Government of India, through the Department of Financial Services (Ministry of Finance) (“DFS”), is proposing extensive amendments to the Insurance Act, 1938 (the “Act”), with a view to enhance insurance penetration, improve efficiency, and enable product innovation and diversification[1]. The DFS published an office memorandum dated November 29, 2022 (“DFS Memorandum”), setting out the proposed amendments to the Act and commencing a process of public consultation on the proposed amendments until December 15, 2022. The Insurance Laws (Amendment) Bill, 2022 (the “Amendment Bill”), is seen to be catering to the long-standing demands of the industry and seeks to improve some of the fundamental tenets of the Act.Continue Reading The Insurance Laws (Amendment) Bill, 2022 – Charting a new course

Aircraft Leasing in IFSC

The Government of India (“GOI”) has, in the recent years, realised the importance of aircraft leasing activities in the global market and has made its intentions clear to promote aircraft leasing and financing activities in India’s first International Financial Services Centre (“IFSC”) situated in GIFT City, Gandhinagar. The aim is to bring the aircraft leasing business,  currently being carried out in countries that have established themselves in this sector such as Ireland, USA, Hong Kong, Singapore, etc[1], to the Indian shores. Leasing aircraft from abroad leads to incurring substantial liabilities payable in foreign currencies. Hedging currency fluctuations also becomes an additional cost for Indian airline operating companies. The above reasons highlight cost-inefficiencies and put into perspective how crucial it is to begin aircraft leasing and financing activities in India.Continue Reading Part III (A): Aircraft Leasing in IFSC – Let’s kick the tires and light the fires!

Role of IFSC in the Indian SPAC Dream

India, being one of the major consumers of international financial services, has been pushing the envelope on making itself the hub for such services. With this objective, the Government of India had operationalised India’s first (and currently the only) International Financial Services Centre (“IFSC”) at GIFT Multi Services Special Economic Zone (“SEZ”) in Gujarat in April 2015. In this regard and to further this objective, the International Financial Services Centres Authority Act was enacted in December 2019 to set up a unified regulator, viz the International Financial Services Centres Authority (“IFSCA”), which commenced operation in October 2020. The IFSCA has been vested with the roles and powers of four domestic regulators, namely the Reserve Bank of India (“RBI”), the Securities and Exchange Board of India (“SEBI”), the Insurance Regulatory and Development Authority of India (“IRDAI”), and the Pension Fund Regulatory and Development Authority. IFSCA has been set up to develop and regulate financial institutions, financial services, and financial products within the IFSCs in India.Continue Reading Role of IFSC in the Indian SPAC Dream: An Overview – Part 1

Pledge of Shares of an Insurance Company - A discussion on IRDAI clarifications

Introduction

We have in our recent post discussed the clarifications issued by the Insurance Regulatory and Development Authority of India (“IRDAI”)  in relation to Transfer of Shares of an insurance company. These clarifications were notified pursuant to the circular issued to all CMDs and CEOs of insurance and re-insurance companies on July 22, 2020 (“Circular”). However, the Circular also discussed certain critical issues relating to creation of pledge over shares of an insurance company.
Continue Reading Pledge of Shares of an Insurance Company: A discussion on IRDAI clarifications

Transfer of Shares of an Insurance Company - The much-needed clarifications

The Insurance Regulatory and Development Authority of India (“IRDAI”) issued a circular (“Circular”) on July 22, 2020 to all CMDs and CEO of insurance and re-insurance companies with a view to bring more clarity on issues relating to the transfer of shares of insurance companies and the creation of pledge over shares of insurance companies Set out below is a brief summary of the clarifications provided by the Circular in relation to transfer of shares of an insurance company:

 A. Clarification on IRDAI’s guidelines for transfer of shares of listed companies
Continue Reading Transfer of Shares of an Insurance Company: The much-needed clarifications

IRDAI’s Approach to ‘Fit and Proper’ Assessment in light of the Sahara Life Saga

Introduction

An issue of significant relevance to financial regulators world-over is the fitness and propriety of key shareholders of financial entities. The objective of this blog is to analyse IRDAI’s approach to assessment of ‘fit and proper’ status of significant owners of insurers, especially in light of the order passed by the IRDAI in the matter of M/s Sahara India Life Insurance Company Limited (“Sahara Life”) on December 30, 2020 (“IRDAI Order”). Before we delve into IRDAI’s approach in this regard, it is important to trace the chronology of events, leading to the IRDAI Order.
Continue Reading IRDAI’s Approach to ‘Fit and Proper’ Assessment in light of the Sahara Life Saga