Irda Says 'Yes' To Indian Insurance Cos For Setting Up Overseas Biz
India, May, 30, 2013
“Insurance Regulatory and Development Authority (IRDA) has given a green signal to the Indian insurance companies to open offices outside India. This approval is restricted to only those insurance companies who have maintained a good financial health and have been operating for atleast three years.
With respect to the approval, as mentioned in the IRDA guidelines – “The class of insurance business to be transacted at foreign insurance company could be:
a. Life insurance business
b. General insurance business including health insurance business
c. Reinsurance business
and will be the same for which the Indian insurance company has been granted the certificate of registration by the Authority.”
As further mentioned in the IRDA guidelines, only the life insurance companies who have a minimum net worth of Rs 500 crore can apply for staring business outside India. Whereas, IRDA has set the minimum net worth for Non-Life insurance companies at Rs and Rs 250 crore and Rs 750 crore for reinsurance companies.
In its guidelines, IRDA has mandated that the companies who are willing to set up business in foreign countries should have grossed “profits for the three years out of the last five years.”
In interest of the “domestic policyholders”, the insurance regulator has objected Indian insurers from using the fund of domestic policyholder for starting business outside India.
With respect to capital requirements for opening of foreign Insurance Company (including branch office) of Indian insurance company, IRDA stated in its guidelines that, “the Indian insurance company shall have in place appropriate arrangements to ensure that the policyholder’s liabilities that arise for foreign operations are adequately ring-fenced in order to protect the Indian policyholder.”
The regulator further stated, “wherever the company’s foreign insurance company (including branch office) operation results/ likely results point to a loss, then additional capital requirements for meeting the losses shall be contributed out of the shareholder’s funds as no contributions from the policyholder’s funds of the parent would be available for the purpose.”
Detailed IRDA Guidelines on this can be viewed at: http://www.irda.gov.in/ADMINCMS/cms/frmGuidelines_Layout.aspx?page=PageNo1987