Insurers in operation for 3 years eligible to set up foreign office: Irda

Mumbai: Indian insurance companies in operation for at least three years will be eligible for opening offices outside the country. In a set of fresh guidelines, the Insurance Regulatory and Development Authority (Irda) said life insurance, non-life insurance and reinsurance companies should have a net worth of Rs 500 crore, Rs 250 crore and Rs 750 crore, respectively, to apply for opening offices abroad.

According to Irda, the term ‘foreign insurance company’ would mean a company registered outside India, whose paid-up capital was subscribed to by an Indian insurance company. It shall include a foreign subsidiary company wherein the Indian insurance firm has a holding of more than 50 per cent of its paid-up capital or is in a position to control the composition of its board of directors. It shall also include a branch office of the Indian insurance company.

The guidelines said the registered Indian insurance company should not suffer from any adverse report of the authority on its record of regulatory compliances, for three years out of the past five years from the date of application.

The applicants would need to have booked profits for the three years out of the past five years. “Indian insurers should formulate an ‘investment policy’ to suit the scale, nature and area of operations of the foreign branch offices apart from business considerations and submit the same before its board of directors for approval,” Irda said.

Apart from compliance with the host country solvency requirements, Irda has asked the companies to comply with the know your customer (KYC) and anti-money laundering (AML) guidelines.

On a quarterly basis, these insurers should report business numbers of foreign branch offices, claims performance and expenses incurred.

Irda said the company board should be responsible for monitoring the functioning of its foreign operations at regular levels and report to the regulator any event/development, which could impair the functioning of foreign operations.

"Any foreign insurance company with the approval of the Authority shall be closed only with the prior approval of the Authority and subject to compliance of the host country rules and regulations," said Irda.