The Insurance Regulatory and Development Authority of India (IRDAI) on May 15, 2023, issued a circular regarding the modification of the Surety Insurance Guidelines
This has a reference to circular Ref No. IRDAI/NL/GDL/SIC/01/01/2022 regarding the IRDAI (Surety Insurance Contracts) Guidelines, 2022 dated January 03, 2022, and Circular No. IRDAI/NL/Cir/Misc/7/1/2023 dated January 12, 2023
This circular shall come into force with immediate effect.
The following has been modified namely: -
• Clause 6.1 which states “A General Insurer shall commence Surety Insurance business subject to” the sub-clause 6.1 (a) shall be replaced with the following namely: -
“Meeting the requirement of maintaining a solvency margin of not below the control level of solvency specified by the Authority.
Provided that where the solvency margin of the insurer falls below the specified threshold limit at any point of time, the insurer shall stop underwriting new Surety Insurance business until its solvency margin is restored to above the threshold limit.”
• Clause 6.4 (d) states that the Insurer underwriting Surety Insurance business shall comply with the limit of guarantee that shall not exceed 30 percent of the contract value the following shall stand deleted namely: -
‘The limit of guarantee shall not exceed 30 percent of the contract value shall be deleted.
• It states that All other provisions of the within referred Surety Insurance Guidelines, 2022 and IRDAI Circular Ref: IRDAI/NL/Cir/Misc./7/1/2023 dated January 12, 2023, shall remain unaltered.
[Notification No. IRDAI/NL/CIR/SIC/104/5/2023]
