The Insurance regulatory and Development Authority of India (IRDAI) on May 12, 2022 has issued a circular regarding the Rationalization of compliance requirements after receiving several representations of Foreign Reinsurance Branches (FRBs) as they are not directly dealing with the retail customers. Further, representations have also been received from the non-life industry to dispense with the Form NL 40 on disclosure of Underwriting performance on their respective websites.
- Publication in News Paper by FRB and Lloyd’s India:
FRBs and Lloyd’s India provide reinsurance support to the direct insurers and the insurers do conduct their due diligence on the FRBs while entering reinsurance contracts with them. The necessary information on financials is also made available through Public Disclosures on the respective website of the FRBs. Reinsurance business is B2B segment and the policyholders do not deal with the Reinsurers.
After reviewing, IRDAI has decided that the FRBs and Lloyd’s India need not publish the half yearly and annual Revenue Account, Profit & Loss Account, Balance Sheet and Analytical Ratios etc. as mandated in the captioned circular in the newspapers. However, they may continue to publish a true and accurate abstract of the various returns for the purpose of publicity on a voluntary basis pursuant to provisions of section 25 of the Insurance Act, 1938.
• Stewardship Returns and Public Disclosure by FRB and Lloyd’s India:
Traditionally, the FRBs and Lloyd’s India do not invest in equity instruments and they mainly invest in G Sec and Debt markets. Based on the investment exposures of the Branches of Foreign Reinsurers and Llyod’s India are granted following exemptions -
• The entities, whose investment policy does not permit the investment in equity are exempted from the application of Common Stewardship Code, disclosure
i. requirements and returns. The Public Disclosure may, accordingly, be shown as ‘Not Applicable’.
ii. The entities, whose investment policy allows equity investment but have not made any investment in equity – the Code is applicable. However, a NIL return will be a sufficient compliance for the same.
iii. Other entities have to comply with the prescribed requirements.
• Public Disclosure of Form - 40 on underwriting performance by the General Insurers, FRBs and Lloyd’s India.
[Circular No. IRDAI/F&A/CIR/MISC/99/5/2022]
