Crack Grade B 1

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 Crack Grade B 2

INDEX

1. Master Circular on Operations and Allied Matters of Insurers .......... 4

Advertisements ..................................................................................................4
A. There shall be no advertisement: ...................................................................................... 4
B. Advertisements on linked products and variable annuity pay out options ........................ 4
Opening of places of business of insurers ............................................................4
Opening of Foreign Branch Office outside India or at International Financial Services
Centres (IFSC): Responsibilities of the Board of the Insurer .................................................. 4
Activities permitted at a representative or a Liaison Office .................................................... 4
Grievance Redressal System ...............................................................................5
Resolution Timelines ..........................................................................................5
Unclaimed amount of policyholders ....................................................................5
Unclaimed Amounts ............................................................................................................. 5
Senior Citizens Welfare Fund (SCWF) ................................................................................... 6
Treatment of Unclaimed Amounts ......................................................................................... 6
Recovery of Fund Administration Expenses .......................................................................... 6
Reporting of Unclaimed Amounts.......................................................................................... 6
Policyholder’s Engagement and Awareness .........................................................6
Regular Contact with policyholders ....................................................................................... 6
2. Master Circular on General Insurance Business ............................... 7
Unique Identification Number – Methodology .....................................................7
Basic Definitions ................................................................................................8
Base Product ........................................................................................................................ 8
Line of Business ................................................................................................................... 8
Long-Term Product ............................................................................................................... 8
Reinsurance-driven Product ................................................................................................. 8
Short-Term Product .............................................................................................................. 8
3. Master Circular on Reinsurance ...................................................... 9
Operations of Foreign Reinsurers’ Branch Offices in India ..................................9
Appointment of Statutory Auditors by FRBs .......................................................9
Eligibility Conditions for Statutory Auditors .......................................................................... 9
Maximum Number of Statutory Audits of Insurers that can be accepted by an audit firm at a
time .................................................................................................................................... 10
Appointment/ Reappointment and Rotation of Auditors ..................................................... 10
Repatriation of Funds ....................................................................................... 10

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The Branches of Foreign Reinsurers may repatriate funds to their parent entity (Head Office)
without any approval from IRDAI subject to the following conditions: ................................. 10
Repatriation of Funds/ Assigned capital other than Surplus or profits generated by the
operations of branch of foreign reinsurer ............................................................................ 10
Outsourcing of Activities by FRB/ Lloyd’s India/ Service companies of Lloyd’s India .......... 11
Activities prohibited from outsourcing: ............................................................................... 11
Transition Provisions .......................................................................................................... 11
Outsourcing Policy and its implementation ......................................................................... 11
Collateral requirements for placement of reinsurance business with Cross Border
Reinsurers (CBRs) ............................................................................................. 11

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 Crack Grade B 4
1. Master Circular on Operations and Allied Matters of
Insurers
Advertisements

A. There shall be no advertisement:

1) On services not related to insurance

2) On comparison of rates/ discounts to erstwhile tariff, in case of a general
insurance product
3) Highlighting the potential benefits of an insurance product without a fair
indication of associated risks, if any
4) Disclosing benefits partially without corresponding limitations/ conditions/
implications,
5) Exaggerating the benefits of the product,
6) Denigrating reputation of a competitor or the industry

B. Advertisements on linked products and variable annuity pay out

options

• Unit linked and/or index linked products shall not be advertised as “investment
products”
Every insurer and distribution channel shall comply with standards as prescribed by the
Advertising Standards Council of India (ASCI)

Opening of places of business of insurers

• Places of business shall be opened within a period of one year from the date of
approval after which the approval stands lapsed.

Opening of Foreign Branch Office outside India or at International

Financial Services Centres (IFSC): Responsibilities of the Board of the
Insurer

1) Approve, inter-alia, the operational matters pertaining to establishment and

conduct of business of the foreign branch office in the host country
2) Monitor the functioning, financial and business performance of the foreign branch
office at regular intervals
3) Immediately report to the Authority any events or developments which can impair
the functioning of the foreign branch office

Activities permitted at a representative or a Liaison Office

a) Undertaking development and promotional activities such as gathering financial,

economic and commercial information, educating prospects about advantages of
insurance.

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b) Promotion of company's products, customer service and identifying prospects of
the host country.
c) Conducting seminars to create awareness on insurance.
d) Liaison with foreign brokers, re-insurers for ceding/ accepting reinsurance and
support for formalizing treaties.
e) Liaison with surveyors / risk assessors.
f) Supporting processing of claims pertaining to risks in host country.
g) Sharing expertise on underwriting practices.
h) Sharing business information.
i) Conducting research or related activity.

Grievance Redressal System

Every insurer shall

• Establish technology-based grievance redressal infrastructure

• Endeavour to move towards “zero grievances” by adopting consumer friendly
processes
• Integrate its grievance portal with the Bima Bharosa portal
• Have in place their internal ombudsman scheme

Resolution Timelines

Unclaimed amount of policyholders

Unclaimed Amounts

It includes any amount held by an insurer, but payable to consumers, including income
accrued thereon, on account of their non-contactability through any means and
remaining unpaid beyond twelve months from the due date of such payment.
Provided that the following pending amounts shall be held under separate sub-heading
"Litigation and others" under unclaimed amounts till such time the payments are
made, irrespective of the status of the contactability:
1) due to any litigation under an insurance policy;
2) due to rival claims or open title;

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3) due to freezing / blocking of insurance policies by any government agency;
Provided further that the amounts payable under the following shall not be considered
as unclaimed amounts:
1) Annuity policies and all in-force insurance policies including reduced paid up and
fully paid up on due date;
2) in respect of claims initiated by consumer;

Senior Citizens Welfare Fund (SCWF)

It means the Fund as defined in section 122 of Part 11 of Chapter VII of the Finance
Act, 2015, or any amendment thereof;

Treatment of Unclaimed Amounts

• No insurer shall appropriate or write back any part of the unclaimed amounts
belonging to the policyholders/ beneficiaries under any circumstances.
• All insurers having unclaimed amounts of consumers for a period of more than
10 years as on 30th September every year, have to transfer the same to the
Senior Citizens' Welfare Fund (SCWF) on or before 1st March of the financial year.
• Every Insurer shall make searchable databases available on their websites, in
relation to information about any unclaimed amount of Rs 1000/- or more.
• Consumers shall be eligible to claim the dues under their policies up to 25 years
from the date of transfer of the same to the SCWF by the concerned insurer.
• If no claim is made up to a period of 25 years after transfer to the SCWF, such
amounts shall be escheat to the Central Government, in terms of Section 126 of
the Finance Act, 2015.

Recovery of Fund Administration Expenses

• Insurers may recover administration and fund management expenses up to a

maximum of 20 basis points per annum on a quarterly basis.

Reporting of Unclaimed Amounts

• Insurers shall furnish an intimation of transfer of unclaimed amounts to the

Senior Citizen's Welfare Fund (SCWF) to the Authority in the format provided in
Master Circular on Submission of Returns within 7 days from the date of
transfer.

Policyholder’s Engagement and Awareness

Regular Contact with policyholders

• Every insurer shall put in place required systems to send renewal notice to all
policyholders, at least 30 days in advance from the due date.
• Insurers shall display prominently the following on their website, at the minimum;
o List of products on offer and products withdrawn
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o the prospectus for each product on offer for sale
o Turn-around time for policy servicing
o Procedures to be followed by the policyholder for claim settlement.
Insurer shall not accept any new policy from the allotted insurance agent or direct sales
staff with respect to the same policyholder-

• Where the allotted policy is not revived.

• Where the allotted policy is revived, but lapsed or surrendered within a period of 6
months.

2. Master Circular on General Insurance Business

Unique Identification Number – Methodology
A product/ add-on can be introduced for sale in the market after assigning the Unique
Identification Number (UIN).
This unique number will have the following characters/digits: -

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Basic Definitions

Base Product

A Retail Product which is identified and designated as such by the Product Management
Committee of the Insurer and which defines the necessary minimum coverage
addressing a specific insured interest or target segment of prospects/ insurance buyers
in each Line of Business.

Line of Business

A grouping or classification by the Insurer of its Products based on criteria such as a

target market/ client segment or nature of assets or of exposures. The grouping may
vary from Insurer to Insurer.

Long-Term Product

A Product with Policy Duration exceeding 12 months and with or without a provision of
extension of the Policy Duration or periodic review of terms and conditions based on
specified criteria which may include claims reported/ settled.

• Explanation: Products serving construction/ erection risks/ projects and

associated exposures (such as legal liabilities, professional indemnities,
interruption risks, surety and inherent/ latent defects) with Policy Duration
exceeding 1 year shall not be classified as Long-Term.

Reinsurance-driven Product

A Product where the rates, terms and conditions of the insurance coverage offered by the
Insurer are primarily determined by the Reinsurer. A situation where Reinsurance is
procured but with the rates, terms and conditions of the insurance coverage determined
by the Insurer, will not be categorized as Reinsurance-driven.

Short-Term Product

A Product designed to be offered with Policy Duration of less than 12 months and with
or without a provision of extension of the Policy Duration or periodic review of terms and
conditions based on specified criteria which may include claims reported/ settled.
NOTE: Rest of the important details are already covered in the first circular.

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 Crack Grade B 9
3. Master Circular on Reinsurance
Operations of Foreign Reinsurers’ Branch Offices in India
In the event of any vacancy in the position of any KMP due to retirement, resignation or
otherwise, the Authority shall be kept informed of such event and the reasons therefor.
Further, FRBs shall initiate action for filling up of such vacant positions on a priority
basis, to ensure that it shall not remain vacant for a continuous period of more than
180 days.

Appointment of Statutory Auditors by FRBs

Section 12 of Insurance Act, 1938 provides that all insurers must be audited annually
by the Auditors.

Eligibility Conditions for Statutory Auditors

• The Auditor of an insurer shall be a firm, including a Limited Liability Firm,

constituted under the LLP Act, 2008.
• The Firm should have been established and in continuous practice for at least 15
years.
The auditor / Firm should have:
(i) a minimum of 5 full-time partners, of whom,
A) at least 2 should have been in full-time practice as partners exclusively associated
with the firm for a continuous period of minimum of 10 years, and
B) at least 2 other partners should have been in continuous association with the
audit firm either as partner or as employee for a minimum period of 5 years, and
C) one partner in full-time practice with the firm as a partner for a minimum period
of 1 year, and
D) out of the total partners of the firm, at least two should be FCA and be in practice
for a minimum period of 5 years as FCA.
OR (Alternatively)
(ii) a minimum of 7 Chartered Accountants,
A) of which not less than 2 are partners in full-time practice exclusively associated
with the firm for a continuous period of a minimum of 10 years, and
B) at least 3 other Chartered Accountants in continuous association with the audit
firm as partner or employee for a minimum period of 5 years, and
C) at least 2 Chartered Accountants should be FCA and be in practice for a
minimum period of 5 years as FCA.

• At least one partner or employee of the audit firm should possess the DISA/
CISA or equivalent qualification as may be recognized by the IRDAI from time to
time and such partner or employee must be involved in the audit of the insurer.

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• The Audit firm should have a minimum experience of 5 years in audit
assignments of entities in the financial sector.
o The Auditor must have experience in insurance company audits of at least
two years.
Removal: An FRB shall not remove its statutory auditor without the prior approval of
the Authority.

Maximum Number of Statutory Audits of Insurers that can be accepted

by an audit firm at a time

• An Audit firm shall be entitled to carry out Statutory Audits of not more than
three Insurers (Life/Nonlife/Health /Reinsurer/ FRB) at a time.
• Provided that an audit firm shall not have the audit assignments of more than
2 insurers in same line of business (i.e. life insurance, general insurance, health
insurance and reinsurance) at a time.

Appointment/ Reappointment and Rotation of Auditors

A) The appointment may be for a duration of up to 4 years.

B) In order to ensure rotation, there shall be a cooling off period of at least 3 years
before an audit firm is reappointed by the FRB for another term of up to 4 years.

Repatriation of Funds

The Branches of Foreign Reinsurers may repatriate funds to their

parent entity (Head Office) without any approval from IRDAI subject to
the following conditions:

A) Up to 50% of surplus or profits generated by the branch of foreign reinsurer as

per the last audited financial statements can be repatriated;
B) Repatriation can be done only once for every financial year;
C) Solvency ratio is at least 50 bps higher than the control level of solvency
after repatriation. Such higher solvency ratio shall be maintained for at least two
quarters following the quarter in which repatriation of surplus or profits generated
by the operations of branch is done;
D) A certificate from certifying Actuary to the effect that sufficient reserves are
made to meet the reinsurance liabilities is furnished to the Authority;
E) Details of the repatriation as indicated below shall be submitted to the Authority
within 7 days of repatriation.

Repatriation of Funds/ Assigned capital other than Surplus or profits

generated by the operations of branch of foreign reinsurer

It may be repatriated with prior approval of the Authority subject to the following:
A) A certificate from the Foreign Reinsurer stating that the Reinsurer has Net Owned
Funds of INR five thousand crores (Rs. 5000cr) or such amount as specified
under Sec 6 (2) of the Insurance Act,1938, as per the last audited balance sheet;
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B) Minimum Assigned Capital as specified by the Authority at the time of grant of
certificate of registration net of provisions as per regulations shall be ensured at
all times;
C) Solvency ratio is at least 50 bps higher than the control level of solvency
after repatriation.
D) Such higher solvency ratio shall be maintained for at least two quarters following
the quarter in which repatriation of assigned capital of branch is done;
E) Such repatriation shall not exceed 20% of assigned capital as per the last
audited financial statements of branch of foreign reinsurer;
F) Not more than one request shall be made by the Foreign Reinsurer in a financial
year;
G) A certificate from certifying Actuary to the effect that sufficient reserves are
made to meet the reinsurance liabilities;

Outsourcing of Activities by FRB/ Lloyd’s India/ Service companies of

Lloyd’s India

• A branch of foreign reinsurer may outsource its permitted non-core activities of

value not more than 20% of its total operating expenses during a financial year,
without the prior approval of the Authority. Information Technology (IT) expenses
and one-off initiatives like RBC, IFRS, etc. shall not be considered for determining
the limit of 20%.

Activities prohibited from outsourcing:

FRBs shall not outsource the core activities such as underwriting, investment, claims
settlement and regulatory compliances and any other function specified by the Authority
in general or with reference to a specific entity.

Transition Provisions

Any CEO of an FRB who has attained the age of 70 years on or before the date of this
Master circular, shall vacate the office within a period of 180 days from the date of this
circular.

Outsourcing Policy and its implementation

In terms of Regulation 30(5) of IRDAI (Registration and operations of Foreign Reinsurers

Branches and Lloyd’s India) Regulations, 2024 any branch of foreign reinsurer which is
currently outsourcing permitted non-core activities of value more than 20% of its total
operating expenses during a financial year shall ensure compliance within 180 days
from the date of coming into effect of this circular.

Collateral requirements for placement of reinsurance

business with Cross Border Reinsurers (CBRs)
The cedant placing re-insurance business with CBRs shall be responsible for collecting
the collateral for such placement(s) as indicated below –

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 Crack Grade B 12
A) The collateral shall be either in the form of irrevocable Letter of Credit (LC) from
the CBR or premium / funds withheld by the ceding insurer.
B) In case of LC
a. The LC shall be issued through any IFSC Banking Unit (IBU) in GIFT IFSC
or a scheduled commercial bank regulated by the Reserve Bank of India,
b. The cedant may choose to accept such LC either in Indian Rupees or in any
freely convertible foreign currency,
c. The amount of LC shall be with reference to the aggregate of outstanding
claims liabilities and IBNR reserves of the ceding insurer for re-insurance
contract or arrangement with the concerned CBR. The amount of collateral
shall be as below:

C) In case of Premiums/ Funds withheld;

a. The premiums/ funds withheld from each CBR shall be identified,
accounted for, kept and invested separately from the funds of the insurer,
b. The investment income, if any, on such withheld funds shall be credited to
such fund(s),
c. The minimum amount of premium/ fund withheld shall be 50% of the
premiums ceded by the insurer to a CBR.
The following reinsurance transactions shall not be subject to collateral requirements:
1) Premium retroceded by the branches of foreign reinsurers and Indian reinsurers to
CBRs;
2) Premiums ceded to CBRs in respect of schemes of the government, such as
PMFBY, PMJAY, PMJJBY, PMSBY; and
3) If total premium ceded by an insurer to CBRs is up to rupees 75 crore during a
financial year, provided that the CBRs are rated ‘A-’ or above from S&P or
equivalent.

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