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Insurance | July – September 2023

Regulatory Updates

Revision of Customer Information Sheet/Know Your Policy for the Consolidated Guidelines on Product filing in Health Insurance Business dated 22 July 2020

As per Regulation 26 of the Insurance Regulatory and Development Authority of India (“IRDAI”) (Health Insurance) Regulations, 2016 (“Health Insurance Regulations”), every policyholder shall be provided with a Customer Information Sheet (“CIS”) as specified by IRDAI in the Health Insurance Regulations. IRDAI has proposed to revisit CIS to ensure that the health insurance policy information is provided in simple and easily understandable language.

An exposure draft of the revised CIS has been issued seeking comments from the stakeholders on or before 13 September 2023. The exposure draft of the revised CIS inter alia includes the requirements for the description of the product/policy, type of insurance product/policy, sum insured, policy coverage and exclusions, waiting period, financial limits of coverage, claims procedure, policy servicing, grievances and obligations.

IRDAI (Re-insurance) (Amendment) Regulations, 2023

The IRDAI (Re-insurance) (Amendment) Regulations, 2023 (“Re-insurance Regulations”) were notified on 22 August 2023 to amend IRDAI (Re-insurance) Regulations, 2018, IRDAI (Registration and Operations of Branch Offices of Foreign Re-insurers other than Lloyd’s) Regulations, 2015, and IRDAI (Lloyd’s India) Regulations, 2016.

The overarching objective of the Re-insurance Regulations is to harmonise and streamline the existing regulations that apply to Indian insurers, Indian reinsurers, Foreign Reinsurance Branches (“FRBs”), and International Financial Centre Insurance Offices (“IIOs”) and to align the regulatory framework for IIOs with the International Financial Services Centres Authority (“IFSCA”).

The minimum capital requirement for FRBs has been lowered to INR 50 crores from the previous threshold of INR 100 crores, with a provision to repatriate any excess assigned capital as per the amended Regulation 5(g) of the IRDAI (Registration and Operations of Branch Offices of Foreign Re-insurers other than Lloyd’s) Regulations, 2015. The format for reinsurance programmes has been simplified and regulatory reporting requirements have been rationalised for increased clarity and effectiveness. Further, the order of preference for insurers has been streamlined from the previous six levels to four.

Technical Guidance in respect of Indian Risk Based Capital Framework – Quantitative Impact Study-1

The IRDAI has vide a circular and a press release dated 10 August 2023, taken the first step towards a ‘Risk Based Capital Framework’ (“RBC Framework”) for the Indian insurance industry. To support this endeavor, an initial ‘Technical Guidance’ document has been made available, detailing the Indian Risk Based Capital framework (“Ind-RBC Framework”) for carrying out the first Quality Impact Study (“QIS1”). The QIS1 will help in assessing the likely impact on the Indian insurance industry of the proposed Ind-RBC Framework for quantification of capital and solvency requirements, and the insurers are responsible for presenting the results of the QIS1 on or before 30 November 2023.

The Technical Guidance document is not publicly available, and is being separately shared with the insurers. Insurers are asked to note that the Technical Guidance is only for the purpose of QIS1 and is not indicative of the final decision of the IRDAI on the Ind-RBC Framework. Further, insurers will also have to continue to submit regulatory returns as mandated by the current regulatory regime, as and when due.

For more information contact:

Shubhangi Pathak
Practice Head – Insurance

VERSED by Veritas Legal intends to provide the readers with an overview of some of the noteworthy legal developments for education / information purposes only. This newsletter should not be construed or relied on as legal advice, or to create a lawyer-client relationship. Readers should reach out to us for any specific factual or legal questions or clarifications; and are encouraged to seek legal advice before acting on any information provided herein. The enclosed information is available in the public domain and shall not be construed as dissemination of any confidential information.

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