Review of FDI Policy on Insurance Sector

(1)

FDI in the Insur­ance sec­tor, as pre­scribed in the Insur­ance Act, 1938, is allowed under the auto­mat­ic route.

(2)

This will be sub­ject to the con­di­tion that Com­pa­nies bring­ing in FDI shall obtain nec­es­sary license from the Insur­ance Reg­u­la­to­ry & Devel­op­ment Author­i­ty for under­tak­ing insur­ance activities.

(3)

The pro­vi­sions of para­graphs 6.2.17.2.2(4)(i) © & (e), relat­ing to ‘Bank­ing Pri­vate Sec­tor’, shall be applic­a­ble in respect of bank pro­mot­ed insur­ance companies.

(4)

(a)

which is formed and reg­is­tered under the Com­pa­nies Act, 1956;

(b)

in which the aggre­gate hold­ings of equi­ty shares by a for­eign com­pa­ny either by itself or through its sub­sidiary com­pa­nies or its nom­i­nees, do not exceed 26% paid-up equi­ty cap­i­tal of such Indi­an insur­ance company;

(c)

whose sole pur­pose is to car­ry on life insur­ance busi­ness or gen­er­al insur­ance busi­ness or re-insur­ance business.

(5)

As per IRDA (Insur­ance Bro­kers) Reg­u­la­tions, 2002, “insur­ance bro­ker” means a per­son for the time being licensed by the Author­i­ty under reg­u­la­tion 11, who for remu­ner­a­tion arranges insur­ance con­tracts with insur­ance com­pa­nies and/or re-insur­ance com­pa­nies on behalf of his clients.

(6)

As per IRDA (TPA-Health Ser­vices) Reg­u­la­tions, 2001, “TPA” means a Third Par­ty Admin­is­tra­tor who, for the time being, is licensed by the Author­i­ty, and is engaged, for a fee or remu­ner­a­tion, by what­ev­er name called as may be spec­i­fied in the agree­ment with an insur­ance com­pa­ny, for the pro­vi­sion of health services.

(7)

Sur­vey­ors and Loss Asses­sors will be gov­erned by the IRDA Insur­ance Sur­vey­ors and Loss Asses­sors (Licenc­ing, Pro­fes­sion­al Require­ments and Code of Con­duct) Reg­u­la­tions, 2000.

(i)

(ii)

(iii)

(iv)

(v)

Oth­er Insur­ance Inter­me­di­aries appoint­ed under the pro­vi­sions of Insur­ance Reg­u­la­to­ry and Devel­op­ment Author­i­ty Act, 1999 (41 of 1999)

(a)

No Indi­an insur­ance com­pa­ny shall allow the aggre­gate hold­ings by way of total for­eign invest­ment in its equi­ty shares by for­eign investors, includ­ing port­fo­lio investors, to exceed forty-nine per cent of the paid up equi­ty cap­i­tal of such Indi­an insur­ance company.

(b)

For­eign direct invest­ment pro­pos­als which take the total for­eign invest­ment in the Indi­an insur­ance com­pa­ny above 26 per cent and upto the cap of 49 per cent shall be under Gov­ern­ment route.

(c)

For­eign invest­ment in the sec­tor is sub­ject to com­pli­ance of the pro­vi­sions of the Insur­ance Act, 1938 and the con­di­tion that Com­pa­nies bring­ing in FDI shall obtain nec­es­sary license from the Insur­ance Reg­u­la­to­ry & Devel­op­ment Author­i­ty of India for under­tak­ing insur­ance activities.

(d)

An Indi­an insur­ance com­pa­ny shall ensure that its own­er­ship and con­trol remains at all times in the hands of res­i­dent Indi­an enti­ties referred to in Noti­fi­ca­tion No. G.S.R 115 (E), dat­ed 19th Feb­ru­ary, 2015.

(e)

For­eign port­fo­lio invest­ment in an Indi­an insur­ance com­pa­ny shall be gov­erned by the pro­vi­sions con­tained in sub-reg­u­la­tions (2), (2A), (3) and (8) of reg­u­la­tion 5 of FEMA Reg­u­la­tions, 2000 and pro­vi­sions of the Secu­ri­ties Exchange Board of India (For­eign Port­fo­lio Investors) Regulations.

(f)

Any increase of for­eign invest­ment of an Indi­an insur­ance com­pa­ny shall be in accor­dance with the pric­ing guide­lines spec­i­fied by Reserve Bank of India under the FEMA.

(g)

The for­eign equi­ty invest­ment cap of 49 per cent shall apply on the same terms as above to Insur­ance Bro­kers, Third Par­ty Admin­is­tra­tors, Sur­vey­ors and Loss Asses­sors and Oth­er Insur­ance Inter­me­di­aries appoint­ed under the pro­vi­sions of the Insur­ance Reg­u­la­to­ry and Devel­op­ment Author­i­ty Act, 1999 (41 of 1999):

(h)

Pro­vid­ed that where an enti­ty like a bank, whose pri­ma­ry busi­ness is out­side the insur­ance area, is allowed by the Insur­ance Reg­u­la­to­ry and Devel­op­ment Author­i­ty of India to func­tion as an insur­ance inter­me­di­ary, the for­eign equi­ty invest­ment caps applic­a­ble in that sec­tor shall con­tin­ue to apply, sub­ject to the con­di­tion that the rev­enues of such enti­ties from their pri­ma­ry (i.e. non-insur­ance relat­ed) busi­ness must remain above 50 per cent of their total rev­enues in any finan­cial year.

(i)

The pro­vi­sions of para­graphs 6.2.17.2.2(4) (i) © & (e), relat­ing to ‘Bank­ing Pri­vate Sec­tor’, shall be applic­a­ble in respect of bank pro­mot­ed insur­ance companies.

(j)

Terms ‘Con­trol’, ‘Equi­ty Share Cap­i­tal’, ‘For­eign Direct Invest­ment’ (FDI), ‘For­eign Investors’, ‘For­eign Port­fo­lio Invest­ment’, ‘Indi­an Insur­ance Com­pa­ny’, ‘Indi­an Com­pa­ny’, ‘Indi­an Con­trol of an Indi­an Insur­ance Com­pa­ny’, ‘Indi­an Own­er­ship’, ‘Non-res­i­dent Enti­ty’, ‘Pub­lic Finan­cial Insti­tu­tion’, ‘Res­i­dent Indi­an Cit­i­zen’, Total For­eign Invest­ment’ will have the same mean­ing as pro­vid­ed in Noti­fi­ca­tion No. G.S.R 115 (E), dat­ed 19th Feb­ru­ary, 2015.