Indian Insurance Companies (Foreign Investment) Amendment Rules, 2019: The Insurance Regulatory and Development Authority of India (IRDAI) has shared Indian Insurance Companies (Foreign Investment) Amendment Rules, 2019 on its website. The amended rules, which were notified by the Department of Financial Services of the Ministry of Finance on September 2, 2019, remove the cap on foreign equity investment in insurance intermediaries. It has changed Rule 9 of the Indian Insurance Companies (Foreign Investment) Rules, 2015, which had put a cap of 49 per cent on foreign equity investment for intermediaries. The new rules say: “There shall be no cap to foreign equity investment for intermediaries or insurance intermediaries.”

As per the new rules, Foreign Direct Investment (FDI) will be allowed under the “automatic route” after verification by the authority. Also, foreign investment in intermediaries or insurance intermediaries will be governed by terms of the rules of 2015. For banks allowed to function as an insurance intermediary, there is no change in the foreign equity investment caps. Banks in insurance business must have non-insurance related revenue above 50 per cent of their total revenue in a financial year.

“The foreign direct investment proposals under this rule shall be allowed under the automatic route subject to verification by the Authority and the foreign investment in intermediaries or insurance intermediaries shall be governed by the same terms as provided under rules 7 and 8:

“Provided that where an entity like a Bank, whose primary business is outside the insurance area, is allowed by the Authority to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of such entities from the primary (non-insurance related) business must remain above 50 per cent. of their total revenues in any financial year,” new rules say.

What Indian Insurance Companies (Foreign Investment) Rules, 2015 said

“The foreign equity investment cap of 49 per cent shall apply on the same terms as above to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and other insurance intermediaries appointed under he provisions of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

“Provided that where an entity like a Bank, whose primary business is outside the insurance area, is allowed by the Authority to fnction as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of the entitites from their primary (i.e. non-insurance related) business must remain above 50 per cent of their total revenues in any financial year. “

 

Source:- yahoo