IFSCA considered comments received on its May 12, 2026 consultation paper proposing amendments to the IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022. The comments included a request to permit premium financing through regulated banking or lending institutions, particularly for HNIs and NRIs, subject to risk controls such as eligibility criteria, collateral, suitability assessment and policy assignment to the lender. The proposed change was stated to facilitate higher insurance coverage without immediate deployment of capital and improve premium collection efficiency. Other suggestions sought clarification that references to “contract of insurance”, “policyholder” and “insurer” apply equally to reinsurance business; recognition of premium received by authorised intermediaries or other authorised entities on behalf of insurers or reinsurers; and treatment of reinstatement premium as premium payable under an existing contract. IFSCA stated that the public inputs and draft notification amending the 2022 Regulations were suitably considered and placed before the Authority at its meeting held on July 24, 2026. The existing IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 prescribe permitted modes of premium payment for IIOs.
International Financial Services Centres Authority
Comments received on the proposed amendment to IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022
The consultation paper on captioned regulations seeking comments/ suggestions from the public was issued by IFSCA on May 12, 2026. The following comments / suggestions were received:
| Sr. No. | Reg. No. |
Sub- Regu No. /Para No. |
Comments / Suggestions / Suggested modifications |
Rationale |
|---|---|---|---|---|
| 1 | 4 | Para 1 | The premium to be paid by a person proposing to take an insurance policy (hereinafter referred to as the ‘proposer’) or by a policyholder or by a lending institution on behalf of the policyholder to an IIO may be made through any of the following manner(s), namely:-
(1) recognised instrument of payment using banking channels including payment made through electronic mode; (2) bank guarantee or equivalent instrument (1) cash deposit (not applicable for premium paid by lending institution on behalf of policyholder); or (2) any other method or manner of payment as may be specified by the Authority. Explanation – For premium payment by lending institution on behalf of a policyholder shall be governed through the arrangement between the policyholder and the lending institution |
The IIO has come across instances whereby customers, especially High Networth Individuals “HNI”, request for facilitating premium payment through ‘premium financing’.
Premium financing is an established practice in several international financial centres, whereby a customer obtains financing from a regulated banking institution to pay premiums on a life insurance policy. This arrangement is generally availed by HNIs and Non-Resident Indians How Premium Financing Works 1. A customer purchases a life insurance policy from an insurer. 2. A regulated bank or lending institution provides financing for the policy premiums. 3. Premiums are paid directly by the lender to the insurer. 4. The customer services the financing facility as per agreed terms. 5. The lender may obtain collateral, such as cash deposits, marketable securities, or other eligible assets, depending on the customer’s profile and the financing structure. This arrangement facilitates access to higher insurance coverage without requiring immediate deployment of large amounts of capital thus preserving their existing |
| investment portfolios and business assets.
In order to implement the premium finance approach for premium payment, following risk controls may be evaluated:
Policy assignment to the bank/lending institution to the extent of outstanding loan We believe that enabling premium payment through premium financing may create a level playing field for IFSC Insurance offices vis-à-vis foreign insurers accepting premium payments through premium financing. It may also help in improving premium collection efficiency while reducing operational challenges considering the premium will directly be paid by banks/financial institutions. In view of the above, we request the Authority’s guidance on enabling premium financing for payment of insurance premium. |
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| 2 | 2 | For the purposes of the substituted definition, references to “contract of insurance”, “policyholder” and “insurer” are intended to apply equally in the context of reinsurance business | The existing Regulations expressly apply to reinsurance and include specific provisions governing reinsurance contracts. | |
| carried on by an IIO, including that “policyholder” should be understood to include a cedant. | A clarification would ensure that the substituted definition, drafted primarily in a direct insurance context, operates consistently within the IFSC reinsurance framework and avoids any ambiguity in interpretation. | |||
| 3 | 4 | For the purposes of the substituted definition, where premium is received by an authorised intermediary or other authorised entity acting on behalf of the insurer or reinsurer (including, where relevant, service companies, coverholders, MGAs or reinsurance brokers), and is appropriately accounted for, such receipt may be treated as receipt by the insurer or reinsurer for regulatory purposes | The IFSC framework permits the use of intermediaries and delegated arrangements for underwriting and premium handling. | |
| 4 | 4 | For the purposes of the substituted definition, the treatment of reinstatement premium, including that amounts payable to reinstate cover under an existing contract are treated as premium payable under the contract, and that their timing and payment are determined in accordance with the contract and the existing provisions of the Regulations. | In certain reinsurance arrangements, additional amounts may become payable following a loss to restore cover under an existing contract. These amounts would arise after inception of the contract and are calculated in line with the terms of the contract. |
IFSCA Response: The inputs / comments received from the public consultation were suitably considered. The said inputs / comments along with draft notification towards amendment of IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022, were placed before the Authority in the meeting held on July 24, 2026.
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