Legal Database

These regulations aim to lay down the regulatory framework for the persons who are engaged by the IIOs to perform the roles and discharge the functions as ‘Appointed Actuary’.

4. An IIO shall have a board approved policy known as ‘Product Oversight and Governance Policy’ prepared in accordance with applicable regulatory framework, which shall inter-alia contain the provisions related to - 

(1) methods and processes for designing of the insurance product; 
(2) approval, monitoring, reviewing and distribution of insurance products; and 
(3) corrective steps to be taken for insurance products that are detrimental to the interest of prospects or policy holders. 

Explanation: The ‘Product Oversight and Governance Policy’ shall govern all aspects of an Insurance Product to be marketed and distributed by an IIO, and as such no approval for an Insurance Product is required from the Authority, unless so specified. 
Provided that the IIO shall submit the final policy wording to the Authority, before marketing of an insurance product, other than a re-insurance product, including any modified or revised product, in such manner as may be specified by the Authority. 

5. An IIO shall design and market insurance products considering the understanding of the prospects about the product and ensure that products are compatible with the needs, characteristics and objectives of the prospects including justification of the rates, terms and conditions thereof which shall be duly certified by a qualified actuary. 
Explanation: Any designing and marketing of such insurance product by an IIO shall also be in compliance with provisions of sub-section (1) of section 3 of the Insurance Act, 1938 read with regulation 10 of the IFSCA (Registration of Insurance Business) Regulations, 2021. 

6. An IIO shall maintain the documents and records relating to the actions taken by it in relation to product approval process, in line with ‘Product Oversight and Governance Policy.’ 

7. While designing, marketing or distributing an insurance products, the IIO shall:
(1) take into account the objectives, interests and needs of the prospect;
(2) ensure that the terms and conditions of the product does not adversely affect the interest of prospect; and 
(3) ensure proper management of conflict of interest, if any, with the intermediary or insurance intermediary involved in distribution of the products. 

8. 
(1) An IIO, before marketing or adapting an insurance product, shall test the product appropriately, including but not limited to, scenario analysis where relevant. 
(2) Such test shall also be carried out in case of significant change in the target market. 

9. An IIO shall submit to the Authority requisite information, documents or data relating to a product, as and when sought by the Authority, including justification of the rates, terms and conditions of insurance product offered. 

10. If the Authority is of the view that the product is not in conformity with the requirements under these regulations, and/or not in the interest of prospects or policy holders, it may take appropriate action, including suspension, mandating modification or withdrawal of the product. 

11. Upon receipt of direction of the Authority referred to in regulation 10, the IIO shall forthwith stop marketing and distributing such product either in the same name or under any other name.

The objective of these regulations is to specify minimum information that is required to be maintained by an IIO and IIIO, for the purposes of investigation and inspection, under section 33 of the Insurance Act, 1938.

4. The premium to be paid by a person proposing to take an insurance policy (hereinafter referred to as the ‘proposer’) or by a policyholder to an IIO may be made through any of the following manner(s), namely:- 

(1) recognised instrument of payment using banking channels including payment made through electronic mode;
(2) bank guarantee or equivalent instrument issued by any bank in favour of the IIO for payment of premium, in case the insured fails to make such payment; 
(3) cash deposit; or 
(4) any other method or manner of payment as may be specified by the Authority.

5. Assumption of risk with or without receipt of premium in advance – 
For the purposes of these regulations, an IIO may assume the risk, continue to assume the risk or terminate any assumption of risk, subject to satisfaction of the following - 

(a) the premium payable is received by it; 
(b) the premium payable is guaranteed in terms of sub-regulation (2) of regulations 4 of these regulations; 
(c) the deposit of such amount, as the Authority may specify, is made in advance for adjustment towards premium; or 
(d) the premium payable to it is in accordance with the terms and conditions of the contract of insurance entered into in this behalf or in such manner as may be specified by the Authority from time to time. 

6. An IIO and prospect or insured, as the case may be, may mutually agree for payment of premium in instalments, time schedule and manner of payment of such instalments by incorporating a premium payment warranty clause in the contract of insurance. 

7. The contract of insurance shall, inter-alia, specify the following: 

(1) the manner and time schedule of payment of premium in full or in instalments; 
(2) grace period, if any and consequence of non-payment of premium within such grace period; 
(3) conditions for the revival of lapsed policy, if any; 
(4) date of commencement of risk ; 
(5) date of termination of risk upon non-payment or non-realization of premium taking into account the line of business, duration of the insurance policy; 
(6) Premium Payment Warranty clause, if any, as agreed upon by the IIO and the Insured; and 
(7) any other information as may be specified by the Authority from time to time. 

8. Payment of Premium for contracts of Reinsurance – 

(1) the risk may be assumed without payment of premium in advance on insurances accepted under automatic reinsurance contracts; 

(2) In the case of facultative reinsurance, risk may be assumed without payment of premium in advance in accordance with the terms of the Premium Payment Warranty clause, if incorporated in the contract of insurance; 
(3) Reinsurers shall have systems in place to ensure that all premiums receivable are duly received and accounted for.

2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings as assigned to them below, and their cognate expressions shall be construed accordingly –

a. “Act” means the Payment and Settlement Systems Act, 2007 (51 of 2007);
b. “Authority” means the International Financial Services Centres Authority established under subsection (1) of section 4 of the International Financial Services Centres Authority Act, 2019 (50 of 2019);
c. “Board” means the committee of the members of the Authority known as the Board for Regulation and Supervision of Payment and Settlement Systems constituted under sub-section 2 of section 3 of the Act;
d. “Member” means a member of the Board;
e. “International Financial Services Centre” shall have the meaning assigned to it in clause (g) of subsection (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (50 of 2019);

(2) Words and expressions used and not defined in these regulations but defined in the Act or the Reserve Bank of India Act, 1934 (2 of 1934) or the International Financial Services Centres Authority Act, 2019 (50 of 2019) or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations or any statutory modification or re-enactment thereto, as the case may be.

(1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings as assigned to them below, and their cognate expressions shall be construed accordingly –

(a) “Act” means the Payment and Settlement Systems Act, 2007 (51 of 2007);
(b) “Authority” means the International Financial Services Centres Authority established under subsection (1) of section 4 of the International Financial Services Centres Authority Act, 2019 (50 of 2019);
(c) “Board” means the Payments Regulatory Board constituted under sub-section (2) of section 3 of the Act;
(d) “Chairperson” shall mean the Chairperson of the Board;
(e) “Member” means a Member of the Board;
(f) “International Financial Services Centre (IFSC)” shall have the meaning assigned to it in clause (g) of sub-section (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (50 of 2019).

(2) Words and expressions used and not defined in these regulations but defined in the Act, the International Financial Services Centres Authority Act, 2019 (50 of 2019) or the Reserve Bank of India Act 1934 (2 of 1934) shall have the meanings respectively assigned to them in those Acts.

4. The provisions of this Chapter shall not be applicable to an IIO set up in an unincorporatedform;

Provided thatthe Parent Entity of such IIO shall immediately notify the Authority about the changes, if any, in its Shareholding Pattern or Management Control; 
Provided further that the Parent Entity of such IIO shall ensure that the undertakings given to the Authority regarding maintenance of assigned capital or solvency margin and for meeting all liabilities arising out of insurance or re-insurance business carried out by such IIO, shall continue to remain valid even after change in shareholding pattern or management control.

5. An IIO shall endeavour to prevent any entity from exercising control over it, directly or indirectly, by acquiring significant ownership or interest in the IIO, through portfolio transfers,leading to change in shareholding pattern. 

6. In case of any proposed change in shareholding pattern or management control, an IIO shall-
  (1) inform the Authority of theproposal that could lead to change in control; 
  (2) not issue and allot capital in any form, without obtaining prior approval of the Authority;  
  (3) inform the Authority about proposed change of portfolios; 
Provided that in case the proposed change is beyond the limit specified by the Authority, prior approval from the Authority shall be obtained by the IIO.  
  (4) ensure that the proposed changes in portfolio, shareholding pattern or management control do not affect the seniority of claims; 
  (5) ensure seniority of the claims in the following order of priority: 
           (a) policyholders, 
           (b) creditors, 
           (c) subordinated debt holders, 
           (d) preference shareholders, and 
           (e) equity shareholders. 
  (6) not guarantee any instrument which may affect seniority of claims;  
  (7) not pay dividends on Preference Shares, or pay interest on any Subordinated Debt, without prior approval of the Authority, where – 
          (a)  the solvency ratio is below the minimum Control Level of Solvency, as specified by the Authority;   
          (b) the impact of such accrual/ payment would result in the Control Level of Solvency falling or remaining below the specified regulatory requirement; or 
          (c) payment of dividendor interest (including accrued interest) would result in net loss or increase the net loss. 
  (8) provide complete details to the Authority in advance, about the shareholders or any other entities which may be eligible for compensation due to portfolio transfer or change in control; 

7. The Authority may specify the hair-cut norms on different type of instruments for the purposes of computing „Available Solvency Margin‟; 

8. The Authority may issue guidelines in relation to issuance and allocation of capital of the IIOs; 

9. In case of a merger, amalgamation or transfer involving an IIO, such IIO shall obtain prior approval of the Authority and shall also ensure that – 
  (a)   the available solvency margin of the proposed merged entity will not be lower than the required solvency margin; 
  (b) the scheme is compliant with all applicable laws and regulations; and 
  (c) the scheme does not compromise on the best interests of the policyholders.

(1) An IIO incorporated in an IFSC shall undertake investment of assets in accordance with the provisions of these regulations; 

(2) An IIO not incorporated in an IFSC may either chose to follow norms related to investment of assets as applicable to its parent entity or as specified under these regulations;

(3) An IIO established as a branch of Foreign insurer or Lloyd’s India, registered with the Insurance Regulatory Development Authority of India (IRDAI), may either chose to follow norms related to investment of assets as applicable to its parent entity or as specified under these regulations. 
  Explanation: The choices referred to under sub-regulation (2) and (3) shall be exercised by- 
     (a) by an IIO already registered with IFSCA-within one month of notification of these regulations; 
     (b) by an Applicant seeking registration as an IIO, at the time of seeking registration.

3. The Authority shall design, develop, and maintain a website, in accordance with and in the manner specified in these regulations, for the purpose of disseminating the relevant information to the public.

4. The website shall be designed, developed, and maintained in accordance with and in the manner prescribed under extant guidelines of the Government of India and/or relevant agencies. 

5. The website shall be registered under „gov.in‟ or „nic.in‟ domain, in accordance with the extant guidelines of the Government of India and/or relevant agencies.

6. The hosting service provider for the website shall be chosen, inter-alia, keeping in mind the requirements of high-speed networking, storage and security infrastructure.

7. The Authority may revamp and restructure the website or migrate the solution to another domain/ host to improve the quality of the website, in line with emerging technologies and international best practices.