Regstreet Law Advisors

Insurance Intermediaries

1. IRDAI orders against M/s Tata Motors Insurance Broking & Advisory Services Limited

By its order dated April 07, 2017, in the matter of M/s Tata Motors Insurance Broking & Advisory Services Limited (“Broking Firm”), IRDAI has charged the Broking Firm for violations of Code of Conduct and Regulations of IDRA (Insurance Brokers) Regulations 2013 and few provisions of IRDA (Protection of Policyholder Interests) Regulations, 2002.

The title of charges that attracted directions/warning from IRDAI included (i) the non-production of sample proposal forms sought by the inspection team and (ii) submission of incorrect information to inspection team on tele-marketing activities.

While, with respect to charge (i) IRDAI just directed the Broking Firm to ensure compliance with Regulation 4 of IRDA (Protection of Policyholder Interests) Regulations, 2002 by having proper control mechanism; for charge (ii) the Broking Firm was strictly warned to ensure utmost caution while submitting any information/confirmation to IRDAI. The Regulator further directed the Broking Firm to confirm compliance in respect of the above-mentioned directions/warning, within 21 days from date of receipt of the order.

2. IRDA allows insurers to invest in Real Estate Investment Trusts and Infrastructure Investment Trusts

IRDA vide circular dated March 14, 2017, has made amendments to the Master Circular-Investments, 2016. Noteworthy points proposed in the Master Circular are that an insurer can invest not more than 3% of its fund size or not more than 5% units issued by a single REIT / InvITs, whichever is lower. On the other hand, REIT / InvITs rated not less than AA will form a part of the approved investments and those rated less than AA will be part of the other investments.

Further, no investment will be made in a REIT / InvIT in which the sponsor is under the promoter group of the insurer. Investment in units of InvITs will form part of “Infrastructure Investments” and those in units of REIT will form part of “Investment property”. The Investment in units of REIT / InvITs is to be valued at Market Value which should be valued as per the latest NAV (not more than 6 months old) of the units published by the trust.

3. Exposure Draft on IRDAI (Appointed Actuary) Regulations, 2017 and Expression of Interest in Appointment of Panel of Actuaries

Insurance regulator IRDA has issued the Exposure draft on IRDAI (Appointed Actuary) Regulations, 2017 (“Exposure Draft”). The Exposure Draft has proposed certain amendments to the IRDAI (Appointed Actuary) Regulations, 2000 regarding Appointed Actuaries, by modifying the framework for their appointment, duties, duties and obligations. An Actuary is a person who compiles and analyses statistics and, uses those statistics to calculate insurance risks and premiums. Comments on the Exposure Draft were invited till February 28, 2017.

4. Distribution of other financial products by Insurance Marketing Firms

The Insurance Regulatory and Development Authority of India (IRDAI) in its Circular dated January 27, 2017, while exercising its powers under Reg. 3(c)(vi) of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015, permitted the registered Insurance Marketing Firms (IMF) to distribute financial products / undertake activities regulated by any other financial regulatory after complying with the regulatory framework of such regulator. Under the existing framework, IMFs can distribute financial products such as Mutual Funds regulated by SEBI, Pension Funds regulated by PFRDA etc.

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