[20th March 2024] In exercise of the
powers conferred by Sections 3, 3A, 6, 114A of the Insurance Act, 1938, and
Sections 14, 26 of the Insurance Regulatory and Development Authority Act,
1999, the Authority, in consultation with the Insurance Advisory Committee,
hereby makes the following regulations- CHAPTER
1 Preliminary (i)
These regulations shall be
called the "Insurance Regulatory and Development Authority of India
(Registration and Operations of Foreign Reinsurers Branches & Lloyds India)
Regulations, 2024". (ii)
These regulations shall come
into force from the date of their publication in the Official Gazette. (iii)
These regulations shall be
reviewed once in every three years from the date of publication, unless a
review, repeal or amendment is warranted earlier. To promote orderly
growth of the reinsurance market in India, to strengthen and harmonize the
current legal and regulatory framework in relation to the various aspects
governing entities engaged or intending to engage in reinsurance operations in
India. In these Regulations,
unless the context otherwise requires: (1)
"Act" means the
Insurance Act, 1938 (4 of 1938); (2)
"Applicant" means: (a)
a foreign entity engaged in
reinsurance business other than Lloyds; (b)
The Society of Lloyds on
behalf of Members of Lloyds, hereafter referred to as "Lloyds"; (c)
Lloyds India on behalf of
service companies and syndicates which is desirous of obtaining registration
for operating branch office in India. (3)
"Authority" means
the Insurance Regulatory and Development Authority of India established under
sub-section (1) of Section 3 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999); (4)
"Branch office of
foreign reinsurer" or "Foreign Reinsurers Branch", hereinafter
called by the acronym FRB means branch of an applicant including Lloyds India
which has been granted a certificate of registration by the Authority under
these Regulations to transact reinsurance business; (5)
"Board" for the
purpose of these Regulations means the Board of Directors of FRB or the
"Executive Committee" of Management of FRB duly authorized by the
Board of Directors of its applicant; (6)
"Competent
Authority" means (a)
Chairperson or (b)
such Whole-Time Member or
such Committee of the Whole-Time Members or such Officer (s) of the Authority,
as may be determined by the Chairperson. (7)
"Coverholder"
means an entity authorized by a Managing Agent of Lloyds to enter into
contracts of reinsurance underwritten by Members and syndicates of Lloyds in
accordance with the terms of a binding authority agreement. (8)
"Lloyds India"
means the branch office of the applicant granted certificate of registration by
the Authority under these Regulations to transact reinsurance business. Constituents of
Lloyds India include: (a)
Members of Lloyds, formed
collectively as (b)
Syndicates who delegate
authority to (c)
Service companies, located
within Lloyds India (9)
"Managing Agent"
means a corporate entity which has permission from Lloyds to manage a syndicate
and carry on underwriting and other functions on behalf of members of Lloyds; (10)
"Members of Lloyds
India" means those Members of Lloyds who wish to participate in Lloyds
India; (11)
"Net Owned Fund"
shall consist of: (a)
Paid up equity capital, (b)
Free reserves, (c)
Securities premium account
sum of which is reduced by: (i)
accumulated losses, (ii)
and book value of intangible
assets The Net Owned Fund
should be computed on the basis of last audited Balance Sheet not more than
twelve (12) months prior to the date of application and any capital raised
after the Balance Sheet date should not be accounted for while computing Net
Owned Fund. (12)
"Service Companies of
Lloyds India" means Service Companies registered in India and promoted by: (a)
Managing Agents of Lloyds;
or (b)
Such group entities of
Managing Agents or Members of Lloyds as may be permitted by Lloyds; or (c)
Indian Companies which meet
the specified criteria (13)
"Syndicates of Lloyds
India" means Syndicates of Lloyds who wish to participate in Lloyds India
through a service company delegated authority arrangement; (14)
Words and expressions, used
and not defined in these Regulations but defined in the Act or Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999), rules or
Regulations made thereunder shall have the meanings respectively assigned to
them in those Acts or rules or Regulations. CHAPTER
2 REGISTRATION OF FOREIGN REINSURER BRANCHES, SYNDICATES AND SERVICE COMPANIES
OF LLOYDS INDIA (1)
An Applicant desirous of
obtaining a certificate of registration from the Authority under these Regulations,
shall comply with eligibility criteria, as specified below: (a)
The applicant has obtained
the prior approval or an in-principle clearance from the home country regulator
at the time of filing the application with the Authority. Syndicates of Lloyds
shall obtain permission from the Society of Lloyds London; (b)
The applicant shall be
registered or certified in a regulatory environment in the concerned class of
business in a jurisdiction or country with whom the Government of India has
signed Double Taxation Avoidance Agreement; (c)
The Net Owned Fund of the
applicant shall not be less than the specified amount of rupees five thousand
crore at the time of application; (d)
The applicant has a minimum
credit rating indicating good financial security characteristics from any
international credit rating agency for at least three years preceding the date
of application; (e)
The applicant has been in
reinsurance business for at least ten years; (f)
The applicant has a solvency
margin as stipulated by the home regulator; (g)
The applicant shall infuse a
minimum assigned capital of rupees one hundred crore into Lloyds India and
rupees fifty crore in other cases; (h)
Any other requirement that
may be specified by the Authority from time to time. (2)
An applicant shall not be
eligible to make a requisition for registration application under these
Regulations if the applicants: (i)
requisition for registration
application has been rejected by the Authority or withdrawn by the applicant at
any time during the three financial years preceding the date of requisition for
registration application; or (ii)
application for registration
has been rejected by the Authority or withdrawn by the applicant at any time
during the three financial years preceding the date of requisition for
registration application; or (iii)
certificate of registration
has been cancelled by the Authority or surrendered by the applicant in the
preceding three years. (3)
Where an applicant is part
of a group which already has an entity registered to undertake reinsurance
business in India, it shall not be eligible to apply for Certificate of
Registration under these Regulations. Provided that
syndicates and service companies of Lloyds which do not already have presence
in India shall be eligible to apply for Registration under these Regulations. Explanation: The term
"Group" shall have the same meaning as assigned to it in Insurance
Regulatory and Development Authority of India (Actuarial, Finance and
Investment Functions of insurers) Regulations, 2024 (1)
Permissible Classes of
Re-Insurance Business: The classes of
business of reinsurance for which requisition for registration application may
be made are: (a)
Life and/or General and/or
Health reinsurance business; or (b)
any other classes as may be
specified by the Authority; (2)
Requisition for R1
Application (a)
An applicant, excluding
Lloyds India, desirous of carrying on reinsurance business in India through its
branch office, shall make a requisition for registration application. The
Competent Authority, upon receipt of application for issuance of Form
IRDAI/Reins/R1 and after examining the matters considered relevant to its
satisfaction, shall issue the Form IRDAI/Reins/R1 to the applicant. The form
shall be valid for a period of three months, within which the applicant shall
submit the duly filled Form IRDAI/Reins/R1 to the Authority for its
consideration. Provided
that the Competent Authority, by recording the reasons in writing, may extend
the validity of the IRDAI/Reins/R1 Form by up to three months. (b)
The Competent Authority, by
recording the reasons in writing, may reject the application for issuance of
Form IRDAI/Reins/R1. (3)
R1 Application (a)
Every application in Form
IRDAI/Reins/R1 as per specified format shall be accompanied by such documents,
affidavits, undertakings and declarations, as specified under these
regulations. (b)
The Competent Authority,
after examining the matters considered relevant as specified under Schedule I
and on being satisfied that: (i)
the application in Form IRDAI/Reins/R1
is complete and correct in all respects and is accompanied by all documents
required therein; (ii)
the branch office of the
applicant or Lloyds India, as the case may be, will carry on all functions in
respect of the reinsurance business; (iii)
the certified copy of the
Memorandum of Association and Articles of Association or a corresponding
document which details the manner of formation and conduct of its business is
submitted; (iv)
the name, position, address
and the occupation of the person proposed to be incharge of the operations in
India is included; (v)
an undertaking indicating
infusion of the assigned capital as may be specified by the Authority from
time-to-time is submitted; (vi)
a certified copy of the
annual report of applicant for the last five years preceding the year of filing
of requisition for registration application is submitted; (vii)
a copy of the certificate
from the home country regulator that the applicant has the necessary
permissions to open a branch office in India is submitted; (viii)
a letter of comfort from the
applicant supported by the resolution from its Board of Directors or the
Executive Committee of Management, as applicable, that it shall meet all the
liabilities of the branch office at all times, is submitted; (ix)
Proof in support of payment
of non-refundable fee of rupees five lakh along with applicable taxes towards
processing the Form IRDAI/Reins/R1 through any of the recognized modes of
electronic fund transfer is submitted; (x)
any other requirement that
may be specified by the Authority from time-to-time shall be fulfilled; may accept the
application for the registration (Form IRDA/Reins/R1), subject to the
conditions as may be specified in the approval letter. The applicant shall
be issued the application for registration Form IRDAI/R2 in such format as may
be specified from time to time along with the said approval letter. (c)
The R1 approval shall be
valid for a period of three months, within which the Applicant shall submit
duly filled form IRDAI/Reins/R2 for consideration of the Authority. Provided that the
Competent Authority, on being satisfied, may extend the validity of the R1
approval by up to three months. (d)
The Competent Authority may
reject the application (Form IRDA/Reins/R1) for registration in accordance with
Chapter III of these Regulations. (4)
R2 Application (a)
An applicant, whose
application for registration has been accepted by the Competent Authority,
shall make an application in Form IRDAI/Reins/R2 for grant of a certificate of
registration for carrying on reinsurance business in India. (b)
Every application shall be
accompanied by: (i)
documentary proof of
evidence of having minimum assigned capital of rupees fifty crore; Provided that in case
of Lloyds India, the minimum assigned capital shall be rupees hundred crore. (ii)
an affidavit by the person
authorized by the Board of Directors or the Executive Committee of Management,
of the applicant, as the case may be, certifying that the requirements of the
assigned capital have been satisfied; (iii)
an affidavit by the
applicant certifying that the requirements of section 6(2) of the Act to the
effect that Net Owned Fund of the applicant is above rupees five thousand
crore, have been satisfied; (iv)
a certificate from a
practicing chartered accountant or a practicing company secretary certifying
that all the requirements relating to assigned capital and other requirements
of the Act and these regulations have been complied with by the applicant; (v)
proof in support of payment
of non-refundable fee of rupees five lakh along with applicable taxes towards
processing the Form IRDAI/Reins/R2 through any of the recognized modes of
electronic fund transfer; (vi)
any other information
required by the Authority during the processing of the application for
registration. (c)
The Authority shall take
into account for considering the grant of certificate of registration, all
matters relating to carrying on the business of reinsurance by the applicant
through FRB or Lloyds India and the matters specified under Schedule I. The
Authority on being satisfied that- (i)
the application in Form
IRDAI/Reins/ R2 is complete in all respects and is accompanied by all documents
required therein; (ii)
the applicant shall carry on
the reinsurance business as may be specified; may accept and approve at its
discretion, the application for registration (Form IRDA/Reins/R2) subject to
the conditions as may be specified. (d)
The Authority may reject the
application (Form IRDA/Reins/R2) for registration in accordance with Chapter
III of these Regulations. (1)
The Authority, shall make
such inquiry as it deems fit that: (a)
the applicant is eligible,
and is likely to effectively meet its obligations imposed under the Act; (b)
the financial condition and
the general character of management of the applicant are sound; (c)
the volume of business
likely to be available to and earning prospects of, the applicant will be
adequate; (d)
the interests of the general
public will be served and it contributes to overall growth and development of
the insurance sector if the certificate is granted to the applicant in respect
of the class of reinsurance business specified in the application. (2)
On being satisfied with the
above and matters considered relevant as specified under Schedule I, the
Authority shall, at its discretion, register the applicant as a branch office
of a foreign reinsurer for which the applicant is found suitable and grant the
applicant a certificate in Form IRDAI/Reins/R3 as may be specified by the
Authority from time to time. (3)
The applicant shall be
compliant with "Fit and Proper" criteria on a continuous basis. While considering the
grant of certificate of registration for branch offices of applicants, the
Authority shall stipulate the following conditions: (1)
The applicant shall furnish
a duly certified copy of the resolution of the Board of Directors or the
Executive Committee of Management of the applicant, as the case may be, in
support of the commitment given in the letter of comfort as specified by the Authority; (2)
The branch office shall be
capable of underwriting risks, provide policy services and settling claims; Provided that in case
of Lloyds India, underwriting risks and settling claims on behalf of members of
Lloyds shall be done by service companies and syndicates of Lloyds India; (3)
Society of Lloyds shall set
up Lloyds India, that will be granted certificate of registration to establish
a market and associated structures for conduct of reinsurance business in India
and outside India in the manner set out in these Regulations; (4)
The minimum assigned capital
shall be invested in accordance with the IRDAI Insurance Regulatory and
Development Authority of India (Actuarial, Finance and Investment Functions of
insurers) Regulations, 2024; (5)
The applicant shall make a
commitment to organize training of their Indian underwriters in handling
various classes of business; (6)
The branch office of the
applicant shall comply with the requirements of Foreign Exchange Management
Act, 1999 and any other law in force governing the operations of such office; (7)
The branch office shall
comply with the Insurance Act, 1938, IRDA Act, 1999, rules, regulations,
circulars, guidelines issued thereunder and applicable framework in its
operations. (1)
Norms for establishing
Service Companies of Lloyds India The eligible
promoters as mentioned in regulation 3(12) who wish to participate in Lloyds
India shall set up a service company with the following norms: (a)
The service company may be a
private or a public limited company with a Paid up capital of rupees five lakh
and is registered under the Indian Companies Act, 2013; (b)
The main objects in the
Memorandum of Association shall be to provide all technical, underwriting,
binding risks, settling claims, administrative, accounting, investment,
regulatory and other assistance to the syndicate whom they represent; Provided that the
Authority may specify such other main objects that may be specified in the
MOA/AOA of the service company; (c)
The service company shall be
responsible for all statutory & regulatory filing and compliances on behalf
of the syndicate it represents; (d)
The Chief Executive Officer
(CEO) of a service company shall be subject to fit & proper criteria and
shall be appointed with prior approval of the Competent Authority; (e)
Any other requirement that
may be specified by the Competent Authority from time to time. (2)
Procedure for registration (a)
The eligible promoters as
mentioned in regulation 3(12) who wish to set-up a service company to
underwrite reinsurance at Lloyds India shall make an application to the
Authority through Lloyds India in the manner and form as specified from time to
time. (b)
The service company in its
application for registration shall indicate the name of syndicate that it may
or may not represent in Lloyds India. (c)
The application for
registration of a service company for Lloyds India shall be accompanied with
non-refundable application fee of rupees one lakh along with applicable taxes. (3)
Undertakings to be completed
by Service Company for Lloyds India (a)
The service company along
with its application for registration shall also complete the Lloyds Service
Company Undertaking through which the Service Company agrees to comply with all
relevant rules and requirements of Lloyds and the local legal, fiscal, taxation
and regulatory authorities. (b)
The service company along
with its application for registration shall also complete the Lloyds
Coverholder Decision Paper which provides detailed information on the proposed
Service Company, including the following. (i)
the level of underwriting
and claims authority granted to the Service Company, (ii)
the business strategy for
the Service Company, (iii)
details relating to
principal staff operating in the Service Company, (iv)
financial information, (v)
professional indemnity
details. (vi)
classes of business to be
underwritten by the Service Company, (vii)
the approach the Service
Company will take to ensure compliance with registration requirements, (viii)
other requirements as
specified by Lloyds subject to approval of the Competent Authority. (c)
Subsequent to completing the
decision paper, the service company shall perform Lloyds Service Company Self-
Assessment against the "Principles of Doing Business" issued by
Lloyds which includes information such as any internal audit carried out on the
Service Company. (d)
Any other requirement that
may be specified by the Authority from time to time. (4)
Conditions governing Service
Companies of Lloyds India (a)
The service companies of
Lloyds India shall be subject to compliance of the conditions laid down by
Lloyds India. (b)
The service companies shall
enter into Service Company Underwriting Agreement, a contract that delegates
authority to the service company from the Members of the relevant syndicates. (c)
The service company of
Lloyds India under the Service Company Underwriting Agreement shall be
responsible for the following: (i)
binding insurances and
amendments thereto on behalf of Members of Lloyds; (ii)
acting on behalf of Members
of Lloyds for the purpose of receiving premiums from reinsured and settling
refunds and to receive claims money prior to onward transmission to reinsured; (iii)
management and control of
expenses; (iv)
employment of underwriting
staff; (v)
any other task that may be
entrusted to it by Lloyds India to carry out the business of reinsurance in an
efficient manner. (d)
The service company shall
undertake the following: (i)
issuance of documents
evidencing the contracts of insurance, endorsements and other such documents
evidencing cover as may be agreed in writing by the underwriters; (ii)
collect and process premiums
and return premiums on the underwriters behalf; (iii)
handle claims and/or settle
claims, if authorized; (iv)
shall use prominently the
name of the Syndicates which they represent and that they are merely writing on
Syndicates capacity and not acting as insurers themselves; (v)
skill development and
capacity building of local talent; (vi)
strive to make India as a
reinsurance hub; (vii)
compliance with FEMA and
other local laws; (viii)
compliance to the conditions
laid down by Lloyds India; (ix)
compliance of Act,
Regulations, guidelines, circulars issued by the Authority; (x)
compliance to any other
requirement that may be specified by the Competent Authority from time to time. (1)
Procedure for registration Syndicates of Lloyds
who wish to underwrite reinsurance through a Service Company in Lloyds India
shall apply along-with the service company to the Authority through Lloyds
India in the specified format. (2)
Conditions governing approval
to operate as a syndicate in Lloyds India (a)
Every syndicate shall
through the service company maintain an assigned capital of rupees five crore
at all times. (b)
The syndicates shall enter
into Service Company Underwriting Agreement, a contract that delegates
authority to the service company from the Members of Lloyds of the relevant
syndicates. (c)
Syndicates of Lloyds India
shall ensure that: (i)
the reinsurance business is
managed on behalf of the members of Lloyds India through the service company; (ii)
the members of the
syndicates contract with the reinsured; (iii)
premiums are collected at
syndicate level and carried to a premium trust fund held for that syndicate; (iv)
outward reinsurance is
placed and recoveries are collected at syndicate level; (v)
expenses associated with the
conduct of the business are incurred and paid at syndicate level; (vi)
liabilities are paid at
syndicate level; (vii)
surpluses are determined at
syndicate level; (viii)
cash calls are made at
syndicate level; and (ix)
any other requirement that
may be specified by the Competent Authority from time to time. (1)
The Competent Authority
after taking into account all submissions including the recommendation of
Lloyds India shall issue a certificate of registration jointly to the service
company of Lloyds India and the syndicate (s) it represents in such form as may
be specified. (2)
The certificate for
registration shall be valid unless surrendered or cancelled. (1)
Lloyds India shall inform
the Authority about the Members of Lloyds who wish to participate in Lloyds
India in the specified format. (2)
The list of Members of
Lloyds underwriting through Service Companies of Lloyds India shall be
furnished to the Authority on an annual basis. CHAPTER
3 REJECTION OF APPLICATION FOR REGISTRATION (1)
Where the Competent
Authority is of the view that the requirements as specified in these
Regulations are not fulfilled by the applicant, the Authority may, after giving
the applicant an opportunity of being heard, reject the requisition for
registration application. (2)
The order rejecting the
application under sub-regulation (1) shall be communicated by the Competent
Authority within thirty days of such rejection to the applicant stating therein
the grounds on which the requisition for registration application has been
rejected. (1)
Where the Authority is of
the view that an application for registration is not complete in all respects
and does not conform to the Regulations or instructions as specified, and on
being satisfied that it is not desirable to grant a certificate of registration
to the applicant, the Authority may, by an order, reject the application. Provided that before
rejecting the application the applicant shall be given an opportunity of being
heard by the Authority. (2)
The order rejecting the
application under sub-regulation (1) shall be communicated within thirty days
of such rejection to the applicant in writing stating therein the ground on
which the application has been rejected. (1)
Where an application of an
Indian company for setting up a service company is rejected by Lloyds India,
the Indian company may appeal to the Competent Authority. (2)
The Competent Authority may
consider the appeal and taking into account all facts of the case may pass
necessary orders. In case the application of a service company of Lloyds India
is rejected by the Competent Authority, such an order shall be communicated
within thirty days of such rejection in writing stating therein the ground on
which the application has been rejected. (3)
Where the certificate of
registration issued by the Competent Authority is sought to be revoked by
Lloyds India, request for the same shall be sent to the Competent Authority
along with the recommendation of Lloyds India giving the reasons for
revocation. (4)
The Competent Authority may
consider the request and considering all facts, may pass necessary orders. (5)
In case the certificate of
registration of a service company of Lloyds India is revoked by the Competent
Authority, such an order shall be communicated by the Competent Authority
within thirty days of such revocation in writing stating therein the grounds on
which the application has been revoked. CHAPTER
4 OTHER MATTERS RELATING TO REGISTRATION The Competent
Authority or the Authority may require the applicant to furnish further
information or clarifications regarding the matters relevant to consider the
requisition for registration application or application for registration. (1)
An applicant which has been
granted the Certificate of Registration under these Regulations shall commence
reinsurance business, for which it has been authorized, within twelve months
from the date of approval by the Authority. In case the applicant fails to
commence business within the specified time, the Certificate of Registration
shall become invalid. Provided that in case
the applicant is not in a position to commence the insurance business within
twelve months, it can before the time limit expires, seek an extension from the
Authority through a written application, explaining the reasons for not being
able to commence business within the period specified by the Authority. (2)
The Competent Authority on
receipt of the request for extension of time limit for commencement of business
by the applicant, shall examine the same and communicate the decision in
writing either rejecting the request or granting it; (3)
No extension of time shall
be granted by the Competent Authority beyond eighteen months from the date of
grant of certificate of registration. The Authority may, on
receipt of fee of rupees five thousand along with applicable taxes, issue a
duplicate certificate of registration to an entity that makes an application to
the Authority in such form as may be specified by the Competent Authority. (1)
The applicant of branch of
foreign reinsurer or Lloyds India may apply for surrender of certificate of
registration to the Authority. (2)
A service company and/or
syndicate may apply for surrender of certificate of registration to the
Authority through Lloyds India. (3)
An entity may surrender the
Certificate of Registration granted to it and may request the Authority to
cancel the same in the following cases: (a)
An entity is not in the
position to commence its operations, subsequent to grant of Certificate of
Registration, within the stipulated time; (b)
The business or a class of
the business of the entity has been transferred to or amalgamated with the
business of any other entity after obtaining approval of the Authority; (c)
The business or a class of
the business of the entity has been transferred to any person pursuant to the
Order of the Authority to this effect; (d)
An entity which voluntarily
decides to discontinue its operations in India. (4)
An entity shall furnish
documents and information with the request as may be specified by the
Authority. (5)
Consideration of application
for surrender of certificate of registration: (a)
On receipt of an application
for surrender of certificate of registration from an entity, the Authority may
direct the applicant to discontinue acceptance of new business and may
stipulate such other conditions as deemed necessary. (b)
The Authority may consider
the request for surrender after taking into account all facts of the case including
servicing of the existing contracts and may pass necessary orders. (1)
Where an applicant or its
group entity enters in to a transaction or arrangement which results in a
change of ownership or holding structure with regard to the branch operations
in India, it shall seek the approval of the Authority in the manner as set out
in these regulations. (2)
Notice of Intention: Entities whose
applicant, group entities have decided to enter in to the proposed transaction
or arrangement shall furnish notice of such intention within fifteen days of
submission of the same to the home country regulator of the parent entities. (3)
A request shall be submitted
to the Authority by the parent or the applicant entities having branch
operations in India along with a non-refundable application fee of rupees one
lakh. The request shall be accompanied with enclosures containing related
information as indicated below: (a)
Ownership structure of the
applicant, group and/or the transacting parties. (b)
Board Resolution of the
applicant, parent and/or the transacting parties approving the steps to
undertake transactions which would result in change of ownership structure of
the respective transacting parties. (c)
Details regarding protection
of interests of stakeholders of the transacting parties. (d)
Compliance with the
Corporate Governance stipulations issued by the Authority. (e)
Details of other regulatory
approvals in respect of the proposal: (i)
applications submitted to
the other Indian/foreign Regulators as and when they are filed with other
regulators (ii)
approvals granted by the
other Indian/foreign regulators in this regard (f)
Actuarial report(s) on
valuation of the re-insurance business operations in India of the transacting
parties encompassing the assets, liabilities and solvency position. (g)
Details of reinsurance
strategies and protection and maintenance of reinsurance assets. (h)
Implication of the proposed
transaction on the existing contracts. (i)
Such other information which
the Authority may require from time to time for the grant of final approval. (4)
The proposed transaction or
arrangement shall be implemented with regard to the branch operations in India
only after final approval of the Authority. Provided that no such
proposal shall be approved if in the opinion of the Authority (i)
the available solvency
margin of the merged entity will be lower than the required minimum regulatory
level; or (ii)
the transaction or
arrangement is not compliant with any other applicable laws and Regulations; or (iii)
the transaction or
arrangement is not in the best interests of the Stakeholders; or (iv)
the transaction or
arrangement is not conducive to the orderly growth of the insurance sector. (5)
The Authority may specify
any requirements or procedure for the approval of or to give effect to
Amalgamation, Merger, Acquisition, Transfer or Restructuring of Branches office
of foreign reinsurers, from time to time. CHAPTER
5 PAYMENT OF FEES Every application for
registration shall be accompanied by proof of payment of the application
processing fee as specified in these Regulations. (1)
Branch office of foreign
reinsurer granted registration under these Regulations shall pay such annual
fee as may be specified, along with applicable taxes to the Authority by 31st
day of January of each financial year. Provided that any
branch office of foreign reinsurer shall deposit the minimum annual fee as
specified in sub-regulation 2 within thirty days of grant of registration by
the Authority. (2)
The annual fee shall be
higher of (a)
rupees ten lakhs, or (b)
one twentieth of one percent
of the total premium in respect of facultative reinsurance accepted in India
during the financial year preceding the year in which the annual fees are
required to be paid subject to a maximum of rupees ten crore. (3)
If a Branch office of
foreign reinsurer fails to deposit the annual fee before the date specified in
these Regulations, the Authority may accept the payment of annual fee along
with an additional fee by way of penalty of: (a)
two percent of the annual
fee if paid within thirty days from the specified date; (b)
ten percent of the annual
fee if paid before the end of financial year. (4)
Where a Branch office of
foreign reinsurer has failed to pay the annual fees in accordance with these
Regulations before the end of the financial year, then the certificate of
registration of such entity shall be liable to be cancelled. Every applicant/ Branch
office of Foreign Reinsurer shall pay the requisite fee into the account of
Insurance Regulatory and Development Authority of India. The fee shall be
remitted through electronic mode and the Authority shall be provided the unique
reference number for such transaction. CHAPTER
6 ACTION IN CASE OF DEFAULT (1)
Without prejudice to any
penalty which may be imposed or any action taken under the provisions of the
Act, the registration of FRB including Lloyds India or the syndicate and/or
service company granted certification of registration which - (a)
conducts its business in a
manner prejudicial to the interests of the policyholders or ceding insurers; (b)
fails to furnish any
information as required by the Authority relating to its reinsurance business; (c)
does not submit periodical
returns as required under the Act or by the Authority; (d)
does not cooperate in any
inquiry conducted by the Authority; (e)
indulges in manipulating the
reinsurance business; (f)
indulges in unfair trade
practices; (g)
fails, at any time, to
comply with the provisions of Section 64VA of the Act, as to the excess of the
value of its assets over the amount of its liabilities; (h)
is in liquidation or is
adjudged as an insolvent; (i)
has transferred the business
or a class of business to any person or has been transferred to or amalgamated
with the business of any other insurer without the approval of the Authority; (j)
makes default in complying
with, or acts in contravention of, any requirement of the Act or of any rule or
any Regulation or order made or any direction issued thereunder; (k)
carries on any business
other than insurance business or any business specified by the Authority; (l)
makes a default in complying
with any direction issued or order made, by the Authority under the Insurance
Regulatory and Development Authority Act, 1999; (m)
is banned/debarred/suspended
in its home country; (n)
makes a default in complying
with, or acts in contravention of, any requirement of the General Insurance
Business (Nationalization) Act, 1972 or the Foreign Exchange Management Act,
1999 or the Prevention of Money Laundering Act, 2002; (o)
fails to pay the annual fee; (p)
is convicted of an offence
under any law for the time being in force; may be suspended or cancelled for
the category of reinsurance business for such period as may be specified by the
Authority by an order; Provided that the
Authority for reasons to be recorded in writing may, in case of repeated
defaults of the type mentioned above, cancel the certificate of registration. (2)
The Authority may suspend
the Certificate of Registration in accordance with the process as specified in
these Regulations. No order of suspension of Registration shall be issued
without granting an opportunity of being heard to the concerned entity. Provided that the
Authority may direct the concerned entity to continue to service the existing
reinsurance arrangements for such period as may be specified in the order made
under these Regulations. No order of
suspension or cancellation of the certificate of registration of the Branch
office of a foreign reinsurer shall be issued except after holding an enquiry
in accordance with the procedure as specified in these Regulations. (1)
For the purpose of holding
an enquiry under Regulation 24, the Authority may appoint an enquiry officer. (2)
The enquiry officer shall
issue a notice of enquiry at the principal place of business of the concerned
Branch office of foreign reinsurer(entity). (3)
The entity may, within
thirty days from the date of receipt of such notice, furnish to the enquiry
officer a reply, together with copies of documentary or other evidence relied
upon by it or sought by the Authority. (4)
The enquiry officer shall
give a reasonable opportunity of being heard to the entity to enable it to make
submissions in support of its reply made under sub-regulation (3) above. (5)
If it is considered
necessary, the enquiry officer may ask the Authority to appoint a presenting
officer to present its case. (6)
The entity may either appear
through an authorized employee or through any other person duly authorized by
it before the enquiry officer. (7)
The enquiry officer shall,
after taking into account all relevant facts and submissions made by the
entity, submit a report to the Authority and recommend the regulatory action to
be initiated as also the justification for the same. (1)
On receipt of the report
from the enquiry officer, the Authority shall consider the same and if deemed
necessary by it, issue a show-cause notice as to why action as it considers
appropriate should not be initiated. (2)
The concerned entity shall,
within twenty-one days of the date of receipt of the show-cause notice, send a
reply to the Authority. (3)
The Authority after
considering the reply to the show-cause notice, shall as soon as possible from
the receipt of the reply, pass such orders as it deems fit. If no reply is
furnished to the Authority by the concerned entity within ninety days of the
service of the notice, the Authority shall proceed to decide the issue ex-parte. (4)
An order passed under
sub-regulation 3 hereinabove shall give reasons therefor including
justification for the penalty imposed or any other action taken by that order. (5)
The Authority shall send a
copy of the order made under sub-regulation 4 hereinabove to the concerned
entity. (1)
On and from the date of
suspension of the certificate, the concerned entity shall cease to transact new
reinsurance business. However, the entity shall continue to service and meet
its obligations under all existing reinsurance arrangements. (2)
On and from the date of
cancellation of the certificate, the concerned entity shall cease to transact
reinsurance business. Cancellation of the certificate of registration of an
entity shall indicate that all its reinsurance operations have ceased. If the Authority is
satisfied that the entity has further complied with all the conditions for
efficient conduct of reinsurance business, it may revoke the suspension and
restore its certificate of registration. The order of the
Authority passed under Regulation 26, shall be published by the entity in at
least two daily newspapers in the area where the concerned entity has its
principal place of business. CHAPTER
7 OPERATIONAL MATTERS The Branch office of
foreign reinsurer granted the certificate of registration by the Authority to
transact reinsurance business as a branch office shall ensure that the
following minimum requirements are complied with at all times and shall submit
to the Authority the necessary approval of their Board or the Executive
Committee of their Management (duly delegated by the board), as the case maybe. (1)
Geographical Scope: The
Branch office of foreign reinsurers shall transact reinsurance business with
Indian insurers, as well as reinsurance business outside India in accordance
with their laid down underwriting policy. In case of a service
company, the Syndicate of Lloyds India through their service company shall
transact reinsurance business with Indian insurers, as well as reinsurance
business outside India in accordance with their laid down underwriting policy. (2)
Assigned Capital: The
assigned capital of the Branch office of foreign reinsurer shall not be less
than the amount specified at the time of grant of certificate of registration. (3)
Appointment of Chief
Executive Officer and other Key Management Personnel: The foreign reinsurer
shall obtain prior approval of the Authority on the appointment, reappointment,
removal and managerial remuneration payable to Chief Executive Officer of the
Branch office of foreign reinsurer. The Authority may specify further provisions
with respect to such approval. The person so appointed shall satisfy the fit
and proper criteria stipulated by the Authority. The details of the Key
Management Personnel (KMP) of the Branch office of foreign reinsurer along-with
their bio-data shall be submitted as part of the registration process and any
change subsequently shall be intimated to the Authority. For the purposes of
these Regulations, Key Management Personnel shall include Chief Executive
Officer, Chief Financial Officer, Chief Underwriter, Chief compliance officer
of the Branch office of foreign reinsurer and any other KMP as may be appointed
or designated by it. (4)
Opening of additional
offices: The Branch office of foreign reinsurer may open offices in different
parts of the country giving the reasons, organization resources, reporting,
supervision and control by the main administrative office. Provided that, in
case of Lloyds India and its constituents, Lloyds India being a market shall
ensure that the market and the constituents of Lloyds India are housed within
an office location of Lloyds India for the conduct of reinsurance business. Provided further
that, the Authority may specify provisions with respect to opening of
additional offices by service companies. (5)
Outsourcing: The Branch
office of foreign reinsurers shall retain the core activities such as
underwriting, investment, claims settlement and regulatory compliances. The
branch may outsource functions of back-office servicing, IT, accounts,
marketing, human resources, administration and publicity. No other function
shall be outsourced without the prior approval of the Authority. The Authority
may specify provisions with respect to outsourcing of activities by Branch
office of foreign reinsurer. (6)
Accounting: The Branch of
foreign reinsurer shall submit financial returns including statement of
accounts in the manner as may be specified in Insurance Regulatory and
Development Authority of India (Actuarial, Finance and Investment Functions of
insurers) Regulations, 2024 as amended from time to time. In case of a service
company, the service company shall prepare and submit financial returns
including statement of accounts of the syndicates through Lloyds India in the
manner as may be specified by the Authority through Insurance Regulatory and
Development Authority of India (Actuarial, Finance and Investment Functions of
insurers) Regulations, 2024 as amended from time to time. (7)
Solvency Margin: Every
Branch of foreign reinsurer shall prepare and submit statement of assets,
liabilities and solvency margin requirements in the manner as may be specified
in Insurance Regulatory and Development Authority of India (Actuarial, Finance
and Investment Functions of insurers) Regulations, 2024. In case of a service
company, the service company of Lloyds India shall prepare and submit statement
of assets, liabilities and solvency margin requirements of the syndicates
through Lloyds India in the manner as may be specified by the Authority through
Insurance Regulatory and Development Authority of India (Actuarial, Finance and
Investment Functions of insurers) Regulations, 2024 as amended from time to
time. (8)
Repatriation of funds: - The
Branch office of the foreign reinsurer may transfer part of surplus or profits
generated out of its operations to head office, subject to conditions as may be
specified by the Authority. Any repatriation of funds other than surplus or
profits of the Branch offices of foreign reinsurers shall be only with prior
approval of the Authority. The Authority before granting an approval shall
obtain all relevant information and satisfy itself that the assets of the
Branch office are adequate to meet their liabilities. In addition, any
repatriation of funds shall comply with the other requirement of RBI/ FEMA, as
applicable. The Authority may
issue directions with regard to the repatriation of funds by the Branch office
of foreign reinsurer. (9)
Delegated authorities:
Branch office of foreign reinsurers shall introduce systems and checks to
ensure that delegated powers are exercised prudently and judiciously by the
authorized officials and has no adverse effect on its operations in India. The
applicant shall also review the delegated powers of functionaries at the Branch
of foreign reinsurer as regards adequacy of such powers to meet local
operational requirements and the delegated authority. In case of reduction in
delegation of the authority provided to the local functionaries, the Branch
office of foreign reinsurer has to specify the reason for the same. A copy of
such review shall be filed with the Authority annually along with the
parameters in prior year and current year. In case of service
company, the service company shall introduce systems and checks to ensure that
delegated powers, in respect of syndicates they represent, are exercised
prudently and judiciously by the authorized officials and has no adverse
fallout on the operation of the service company in India. Lloyds and Lloyds
India shall also review the delegated powers of functionaries at every service
company and syndicate level as regards adequacy of such powers to meet local
operational requirements and the delegated authority. A copy of such review
shall be filed with the Authority annually along with the parameters in prior
year and current year. (10)
Governance and oversight:
The applicant and/or the Branch office of foreign reinsurer shall review all
control returns including the system of periodical reviews submitted by the
Branch office of foreign reinsurer to ensure effective governance and oversight
and to monitor their continued viability. A copy of synopsis of the findings of
the inspection / audit / scrutiny and compliance submitted by the branch and
put up to the Audit Committee of the Board, shall also be made available to the
Authority, if required. Explanation: For the
purpose of removal of doubt, for the Branch office of foreign reinsurer other
than Service Companies, reference to Audit Committee of the Board herein shall
mean reference to the Executive Committee of Management. Further, for Service
Companies, reference to Audit Committee of the Board shall mean reference to
the Board of the Service Company itself. (11)
Reporting Requirements: (a)
Every Branch office of
foreign reinsurer shall immediately report to the Authority more than five
percent erosion in the Net Owned Fund of the applicant. (b)
Every Branch office of
foreign reinsurer shall comply with such reporting requirements, as may be
specified by the Competent Authority. (c)
Every Branch office of
foreign reinsurer shall submit to the Authority the following reports. (i)
Financial and Actuarial
reporting as envisaged in Insurance Regulatory and Development Authority of
India (Actuarial, Finance and Investment Functions of insurers) Regulations,
2024. (ii)
Downgrading Reporting: The
Branch office of foreign reinsurer shall immediately report along-with relevant
documents to the Authority any downgrade in rating of parent by any
internationally renowned credit rating agency. (iii)
Report on outsourced
activities/ functions with details of the function(s) outsourced and the entity
to whom it is outsourced. The relationship with the branch, whether parent
entity/ any other group entity shall also be disclosed. (12)
Every Branch office of
foreign reinsurer shall put in place appropriate policy, approved by their
Executive Committee of the Management, on maintenance of records and
destruction of old records, both physical and electronic form, considering the
nature, importance, business needs and other applicable legal and regulatory
requirements. (13)
In addition to the
provisions specified under these Regulations, the Authority may specify
separate corporate governance and public disclosure requirements for Branches
office of foreign reinsurers. (14)
Investments: Every branch
office of foreign reinsurer shall invest and keep invested its assets in accordance
with Insurance Regulatory and Development Authority of India (Actuarial,
Finance and Investment Functions of insurers) Regulations, 2024 as amended from
time to time. (15)
Other issues: The Branch
office of foreign reinsurer shall, with respect to its applicant, immediately
report to the Authority any regulatory or supervisory action taken by the home
country regulator with full details and the penalty or administrative action,
if any imposed and the remedial steps taken by the foreign reinsurer to prevent
its recurrence. Provided that in case
of Lloyds India, it shall immediately report to the Authority any regulatory or
supervisory action taken by the home country regulator against Lloyds or its
Syndicate, Managing Agent or Service Company with full details and the penalty,
any administrative action, if any imposed and the remedial steps taken by
Lloyds to prevent its recurrence. CHAPTER
8 MISCELLANEOUS (1)
The Authority shall have the
right to call, inspect or investigate any document, record or communication
from Branch office of foreign reinsurer. (2)
Notwithstanding the above,
where the Authority is of the opinion that the operations of the Branch office
of foreign reinsurer India are not in the interests of the Indian market, the
Authority reserves the right to take appropriate steps including suspension or
cancellation of certificate of registration after giving an opportunity of
being heard. Branch office of foreign reinsurer opened with the approval of the
Authority shall be closed only with the prior approval of the Authority. (3)
The Authority or Competent
Authority may call for further information or explanation, as may be necessary,
on all matters related to reinsurance business and may direct the Indian insurer
to carry out necessary changes in the reinsurance programme filed with the
Authority. The Competent
Authority may issue circulars, guidelines and directions, if necessary, from
time to time, relating to these regulations including, but not limited to,
transitory provisions regarding implementation process of these regulations. In order to remove
any doubts or difficulties that may arise in the application or interpretation
of any of the provisions of these Regulations, the Competent Authority may
issue appropriate clarifications or guidelines as deemed necessary. (1)
These Regulations shall
repeal the following Regulations from the date these Regulations come into
force:” (a)
IRDAI (Lloyds India)
Regulations, 2016 (b)
IRDAI (Registration and
Operations of Branch Offices of Foreign Reinsurers other than Lloyds) Regulations,
2015 (2)
Unless otherwise provided by
these Regulations, nothing in these Regulations shall deem to invalidate the
contracts entered into prior to these Regulations coming into force. (3)
Unless otherwise provided by
these Regulations, anything done or any action taken or purported to have been
done or taken in respect of these Regulations shall be deemed to have been done
or taken under the corresponding provisions of these Regulations. Schedule I: Assessment of Fit & Proper Criteria The Competent
Authority or the Authority, as the case may be, shall take into account such
matters as may be considered relevant while considering the application for
registration of Applicant and its continuation, including: (1)
the general track record of
conduct and performance of the applicant in the fields of business or
profession they are engaged in; (2)
the record of conduct and
performance of the directors and persons in management of the applicant; (3)
the capital structure of the
applicant, its promoters and shareholders; (4)
ability to infuse capital to
meet business, solvency and regulatory requirements; (5)
the underwriting function
that is transferred to the Branch office of foreign reinsurer; (6)
compliance with all
applicable laws in India including Prevention of Money Laundering Act, FEMA and
taxation law; and (7)
any other relevant matters
for carrying out the provisions of the Act.Insurance Regulatory And
Development Authority Of India (Registration And Operations Of Foreign
Reinsurers Branches & Lloyds India) Regulations, 2024