Circular No: IRDA/F&A/CIR/ACTS/083/03/2012,
Please refer to Circular Nos: F&A/CIR/011/MAR-04, dated 23rd March, 2004 and IRDA/F&A/002/Apr-07, dated 16th April 2007 and IRDA/F&A/CIR/014/May-09, dated 29th May, 2009 issued by the Authority on declaration of bonus by life insurance companies which have set up operations post opening up of the sector.
With a view to facilitating declaration of bonus by an insurance company, where the Life Fund is in deficit, the Authority has laid down the manner of funding of the bonus subject to specified conditions to be strictly complied with. This special dispensation was available to the insurers for the first ten financial years, beginning from the year in which the life insurance company commences operations.
Extension of the Relaxations
The Authority has received representations from life insurance companies for further extension of the period of dispensation considering the current stage of the growth of the insurance sector.
After examining the request of the insurance companies, the Authority has decided to allow the life insurers in the private sector to declare bonus to policyholders where the Life Fund is in deficit for a further period of 2 years i.e., upto the twelfth year of operations commencing from the year in which the life insurance business operations are started. The insurers should comply strictly with all the conditions as stipulated in the Circulars under reference in case they would like to avail of this dispensation.