MINISTRY OF FINANCE
(Department of Financial Services)
New Delhi, the 4th July, 2022
S.O. 3035(E).—In exercise of the powers conferred by section 2CA of the Insurance Act, 1938 (4 of 1938) (hereinafter referred to as the Insurance Act) and in supersession of the Ministry of Finance, Department of Financial Services, notification number S.O. 870 (E), dated the 27th March, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated the 27th March, 2015 and notification number S.O. 4644 (E), dated the 27th December, 2019 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated the 27th December, 2019, except as respects things done or omitted to be done before such supersession, the Central Government hereby directs as under, namely:—
(A) Certain provisions of Insurance Act not to apply in Special Economic Zone and International Financial Services Centre.- The provisions contained in sections 29, 32B, 32C, 32D, 64C, 64D, 64E, 64F, 64G, 64H, 64J, 64K, 64L, 64M, 64N, 64-O, 64R, sub-section (2) of section 64 ULA, sections 101A, 101B, 105B, 110F, 118 and section 120 of the Insurance Act shall not apply to an insurer, being an Indian Insurance Company, insurance co-operative society or a body corporate referred to in clause (c) of sub-section (1) of section 2C of the Insurance Act, carrying on the business of insurance, in a Special Economic Zone as defined in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005), including International Financial Services Centre.
(B) Certain provisions of Insurance Act to apply in International Financial Services Centre with exceptions, modifications and adaptations.— The provisions of the Insurance Act specified hereunder, shall apply to an insurer, being an Indian Insurance Company, insurance cooperative society or a body corporate referred to in clause (c) of sub-section (1) of section 2C of the Insurance Act and carrying on the business of insurance in an International Financial Services Centre, with the following exceptions, modifications and adaptations, namely:—
(a) in section 2A of the Insurance Act, after the words “defined in”, the words, figures and brackets “the International Financial Services Centres Authority Act, 2019 (50 of 2019),” shall be inserted;
(b) for sections 27, 27A, 27B, 27C, 27D and 27E of the Insurance Act, the following section shall be substituted, namely:—
‘27. Investment of assets.— (1) Every insurer, in order to meet its liabilities, shall earmark, invest and at all times keep earmarked and invested, assets of value not less than that of the liabilities.
(2) An insurer may invest not more than five per cent. of the assets referred to in subsection (1), by value, in a company or other body corporate which is owned or controlled by the promoters, subject to such conditions as the Authority may specify by regulations.
(3) Investment of the whole or any part of the assets referred to in sub-section (1) shall be subject to—
(a) the condition that the assets shall be held free of any encumbrance, charge, hypothecation or lien; and
(b) such time, manner and other conditions as the Authority may specify by regulations.
Explanation. -In this section, the expression—
(i) “liabilities” means the net liabilities of the insurer to the holders of policies in the International Financial Services Centre;
(ii) “owned” in relation to a company means the holding of more than fifty per cent. of its paid-up share capital by the promoters, and includes a subsidiary company of such a company;
(iii) “controlled” in relation to a company or other body corporate means the right to appoint majority of its directors or to control its management or policy decisions exercisable by the promoters acting individually or in concert, directly or indirectly, including by virtue of shareholding or management rights or shareholders agreements or voting agreements;
(iv) “promoter” means a person—
(a) who has been named as such in a prospectus inviting offers from the public for the subscription or purchase of any securities of an insurer, or is identified as such by the insurer in its annual returns filed with the person having the duty of registering companies; or
(b) who has control over the affairs of the insurer, directly or indirectly whether as a shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the board of directors of the insurer is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity.’;
(c) in section 64VB of the Insurance Act, for sub-sections (1), (2) and (3), the following sub-sections shall be substituted, namely: —
“(1) No insurer shall assume any risk in respect of any insurance business until and unless—
(a) the premium payable is received by him; or
(b) the premium payable is guaranteed to be paid by such person, in such manner and within such time as the Authority may specify by regulations; or
(c) the deposit of such amount as the Authority may specify by regulations is made in advance for adjustment towards premium; or
(d) payment of premium to be made in any other form by the prospective policyholder is agreed upon between him and the insurer, in such manner as the Authority may specify by regulations.
(2) Any refund of premium which may become due to an insured on account of cancellation of a policy or alteration in its terms and conditions or otherwise, shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order or by such other means as may be specified by the Authority by regulations, and a proper receipt therefor shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.”;
(d) in section 114A of the Insurance Act, in sub-section (2),—
(I) for clause (i), the following clause shall be substituted, namely:—
“(i) the conditions subject to which an insurer who may invest under sub-section (2) and the time, manner and other conditions of investment of assets by an insurer under clause (b) of sub-section (3), of section 27;”;
(II) for clause (zaa), the following clause shall be substituted, namely:—
“(zaa) the manner and time for payment under clause (b), the amount to be deposited under clause (c) and the manner of payment of premium under clause (d), of sub-section (1), other means of payment of refund to the insured under subsection (2) and the manner of receipt of premium under sub-sections (6), of section 64VB;”.
Explanation.—In this notification, the expression “International Financial Services Centre” shall have the same meaning as assigned to it in clause (g) of sub-section (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (50 of 2019).
[F. No. 14017/3/2022-Ins.-II]
SAURABH MISHRA, Jt. Secy.