INDIA Law and Practice Contributed by: Neeraj Tuli, Celia Jenkins and Rajat Taimni, Tuli & Co
Foreign Reinsurers The Insurance Act permits the establishment of FRBs as well as the setting up of service companies under the Lloyd’s India framework. Foreign insurers and syndicates of Lloyd’s may apply for registration of a foreign reinsurer branch in accordance with the IRDAI (Registration and Operations of Foreign Reinsurers Branches and Lloyd’s India) Regulations 2024 (the “FRB Regulations”). The FRB Regulations specify the eligibility criteria of a foreign reinsurer, such as: • credit rating; • infusion of minimum assigned capital into the for- eign reinsurer branch; • in-principle clearance from the home-country regu- lator; and • minimum solvency margin and net-owned funds. Further, foreign reinsurers can also be registered with the IRDAI as cross-border reinsurers (CBRs) in accordance with the Master Circular on Reinsurance 2024 (the “Reinsurance Master Circular”). The Rein- surance Master Circular categorises CBRs into two categories (“eligible CBRs” and “non-eligible CBRs”) – based on the eligibility criteria stipulated at R4 (1) of the IRDAI (Reinsurance) Regulations 2018 (the “Rein- surance Regulations”) – and allows for auto-renewal of a CBR’s permission (by way of a filing reference number). A foreign reinsurer may also apply to the IFSCA to set up a branch within the IFSC and obtain registra- tion as an IIO for carrying out reinsurance business. In order to set up an International Financial Service Centre Insurance Office (IIO), a foreign reinsurer is required to comply with the IFSCA (Registration of Insurance Business) Regulations 2021 (the “IIO Regu- lations”) (which was recently amended by way of IFS- CA (Registration of Insurance Business) (Amendment) Regulations 2024) and the IFSCA (Operation of Inter- national Financial Services Centres Insurance Office) Guidelines 2021 (the “IIO Guidelines”), which govern the registration requirements for an entity seeking to conduct reinsurance business in the IFSC. The IFS- CA (Management Control, Administrative Control and Market Conduct of Insurance Business) Regulations
The Reserve Bank of India (RBI) also issued “Master Direction – Insurance” on 1 January 2016 (amended on 7 December 2021), which – read with the FEMA Insurance Regulations – provides guidance on vari- ous issues, including issuing policies, collecting pre- miums, and settling claims with regard to general, life and health insurance policies from insurers outside India. 2.2 Writing of Insurance and Reinsurance Under the Insurance Act, an Indian insurance com- pany is permitted to carry out insurance business in India. An Indian insurance company is a public limited company formed under the Companies Act 2013 that exclusively carries out life insurance business, general insurance business, health insurance business or rein- surance business. An entity that seeks to carry out insurance business is required to apply for a certificate of registration from the IRDAI in accordance with a three-stage process set out under the IRDAI (Registration, Capital Struc- ture, Transfer of Shares and Amalgamation of Insurers) Regulations 2024 (the “Registration Regulations”). A certificate of registration is required for each catego- ry of insurance business (ie, life, general, standalone health, and reinsurance). In addition, the Registration Regulations set out the essential requirements that an applicant applying for registration is required to fulfil, including (but not limited to): • permissible foreign investment limits; • minimum capitalisation requirements; • minimum qualifications of the directors and princi- pal officers; • planned infrastructure; and • general track record of conduct and performance of each of the Indian promoters and foreign inves- tors in the business or profession they are engaged in. The applicant must also provide adequate documen- tation in support of their application, as prescribed under the Registration Regulations.
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