Notification F. No. IFSCA/2022-23/GN/REG035, Dated: 26.04.2023
The IFSCA has notified the IFSCA (Management Control, Administrative Control and Market Conduct of insurance business) Regulations, 2023. The aim is to put in place the regulatory framework related to Management Control, Administrative Control and Market Conduct of insurance business carried out by an IFSC Insurance Office (IIO) or International Insurance Intermediary Office (IIIO).
As per the norms, an IIO must prevent any entity from exercising control over it, directly or indirectly by acquiring significant ownership or interest in the IIO through portfolio transfers, leading to a change in shareholding pattern.
In the case of any proposed change in the shareholding pattern or management control, an IIO shall –
(a) Inform the Authority of the proposal that could lead to a change in control;
(b) Inform the Authority about the proposed change of portfolios, etc;
(c) Ensure that the proposed changes in portfolio, shareholding pattern or management control do not affect the seniority of claims;
(d) Not guarantee any instrument which may affect the seniority of claims;
(e) Not issue and allot capital in any form, without obtaining prior approval of the Authority;
(f) Provide complete details to the Authority in advance, about the shareholders or any other entities that may be eligible for compensation due to portfolio transfer or change in control.
In addition to this, every IIO must formulate a policy duly approved by its Board for the allocation of direct expenses and apportionment of indirect expenses of management under respective insurance segments. The approved policy on expenses of management shall be submitted to the Authority, as and when directed by it.
Further, every IIO must also formulate a policy duly approved by its Board for procedures to be followed for the opening or closing of a place of business. Every IIO shall obtain prior approval of the Authority before opening or closing a place of business.
Every IIO must ensure that it follows prudent practices on the management of risks arising out of outsourcing with a view to preventing negative systemic impact and protecting the interests of the policyholders. Also, every IIO must ensure the privacy of data concerning all policyholders. The regulations shall come into force from 26.04.2023.
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