Regulatory Updates – Insurance Law, April
Regulations on Lloyd’s India
Late last year, the IRDAI had released an exposure draft on regulations governing the establishment and operation of the proposed Indian branch of the Lloyd’s of London. On March 9, 2016, the IRDAI finally unveiled the IRDAI (Lloyd’s India) Regulations, 2016, that will facilitate the entry of Lloyd’s of London in the Indian insurance sector.
New Regulations on Third Party Administrators
On March 14, 2016, the IRDAI released the IRDAI (Third Party Administrators – Health Services) Regulations, 2016. These regulations are supplemented by the IRDAI’s circular of March 28, 2016 which specifies certain regulatory norms, forms, formats, and check lists that are required to be provided to the IRDAI under the regulations. Third party administrators will now to be governed under this new framework which replaces the erstwhile IRDA (Third Party Administrators – Health Services) Regulations, 2001.
Compliance with Ombudsman Orders
The IRDAI issued a circular dated April 1, 2016 for insurers instructing them to submit data in relation to a list of ombudsman awards that are pending for compliance for the last 3 years, a monthly statement on the status of ombudsman cases and compliance of its awards in the prescribed format and a monthly statement on the status of court cases in the prescribed format.
Order of Preference for Reinsuring Risks
The IRDAI notified a circular dated March 1, 2016 which indefinitely deferred the date of enforcement of the order of preference for reinsuring risks by insurers as set out under the IRDAI (Registration and Operations of Branch offices of Foreign Reinsurers other than Lloyd’s) Regulations, 2015, until further orders from the IRDAI.
New Guidelines on Trade Credit Insurance
On March 10, 2016 the IRDAI notified the Guidelines on Trade Credit Insurance which supersedes the regulatory framework set out under the “IRDA’S Guidelines on Trade Credit Insurance” of October 13, 2010.
Clarifications on Insurance Marketing Firms
The IRDAI issued a circular dated March 2, 2016 clarifying and amending certain aspects of the IRDAI (Registration of Insurance Marketing Firms) Regulations, 2015. The circular provides that that IMFs need not compulsory tie up with two life, two general and two health insurance companies. The circular, however, clarifies that no insurer shall restrict IMFs from having tie-up with other insurers and that the remuneration payable to IMFs by the insurer will be governed under the same regulatory framework as applicable to the insurance brokers.
Appointment of Appointed Actuaries
On March 22, 2016, the IRDAI notified the Guidelines on Appointment Actuary and their Mentors. It was made clear that in the absence of an Appointed Actuary (“AA”), new products will not be approved and if the absence is for a considerable time (such as for more than a year) companies will not be allowed to transact new business. The IRDAI has also recognised the dearth of qualified persons to be appointed as AAs and has permitted actuaries not complying with the prescribed criteria to act as AAs subject to mentoring by a senior actuary in accordance with the guidelines.
Implementation of Indian Accounting Standards
The IRDAI notified a circular on March 1, 2016, which, inter alia, advises insurers to follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the IRDA, in respect of financial statements for accounting periods beginning from April 1, 2018 onwards.