A consultation paper released by the regulator outlines the proposed changes, which include eligibility criteria for both Indian and foreign promoters, safeguards for foreign investments, rules for special purpose vehicles (SPVs), share transfer approvals, and the amalgamation of insurers with non-insurance entities. These proposals also encompass adjustments to processing fees and other clarifying amendments.
According to Informist, IRDAI seeks to revise the definitions of “foreign promoter,” “Indian promoter,” and “special purpose vehicle” to eliminate ambiguities and bolster regulatory oversight, particularly following the rise in foreign direct investment limits within the insurance sector.
Current regulations permit SPVs to act as promoters. The regulator now recommends that applicants provide a rationale for using an SPV structure. Additionally, it suggests extending the definition of eligible SPVs to include foreign-incorporated entities from jurisdictions compliant with the Financial Action Task Force (FATF) framework, as stated in the consultation paper referenced by Informist.
The proposed amendments also aim to enhance the ease of doing business by streamlining regulatory processes, cutting compliance costs, improving operational clarity, and facilitating capital influx into the sector, according to Informist.
Among the suggested changes is the introduction of processing fees for applications requesting a no-objection certificate, alongside a restructuring of rules surrounding insurer names. IRDAI
indicated that these measures are designed to formalize application processes, enhance regulatory clarity, and ensure compliance with statutory requirements.
The regulator has also suggested clarifications regarding approval requirements for renunciation in rights issues, specifying that approval will be necessary for each 5 percentage-point increase in shareholding. Furthermore, it has proposed a rationalization of processing fees. The amendments aim to align regulations with updated statutory provisions, minimize ambiguities, and simplify compliance duties.
In an effort to reduce compliance costs for insurers, IRDAI has proposed significant fee reductions related to amalgamations and share-transfer approvals, as per Informist.
For amalgamation applications, the existing fee structure—set at one-tenth of gross premium with a minimum charge of ₹5 million and a maximum of ₹50 million payable by each insurer—is proposed to be changed to a flat fee of ₹1 million per transacting party.
Likewise, the fee for share transfer applications involving over 50% of an insurer’s equity is suggested to decrease to ₹1 million from ₹5 million. The regulator noted that these changes aim to enhance business ease and stimulate investment and growth in the sector.
Informist also reports that IRDAI has proposed a regulatory framework for insurer names, which includes a transition period for existing insurers to meet new standards and a requirement for prior regulatory approval before any name change.
The regulator seeks feedback from insurers, promoters, investors, professional bodies, legal experts, policyholders, and other stakeholders on the proposed amendments by July 6.
