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The Insurance Regulatory and Development Authority amends the regulations for insurer investments. Every insurer carrying on life insurance, general insurance, or reinsurance business must invest and keep invested funds and assets according to specified patterns. Every insurer constitutes an Investment Committee, draws up an annual Investment Policy, and places the policy before the Board of Directors for approval. Every insurer submits quarterly compliance reports and exposure statements to the Authority.
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[भाग III—खण्ड 4] भारत का राजपत्र : असाधारण 15
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
NOTIFICATION
New Delhi, the 31st May, 2001
F.No. IRDA/Reg/5/2001. - In exercise of the powers conferred by sections 27A, 27B, 27D and 114A of the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations to amend the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, namely:-
1 (1) These regulations may be called the Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2001.
2 In the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, -
After Clause (b) of Regulation 2, the following clause shall be added:-
" (ba) 'Assets' means all the assets of insurer, at their carrying value, shown in his Balance Sheet drawn in Form B-BL of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors' Report of Insurance Companies) Regulations, 2000, but excluding items under the head 'Miscellaneous Expenditure'"
"3. Regulaton of Investments
(1) Life Business: In terms of explanation in Section 27 A of the Act, the Authority has determined that assets relating to Pension business, Annuity business and Linked Life Insurance business shall not form part of the Controlled Fund for the purpose of that section.
Without prejudice to Section 27 or Section 27A of the Act, - Every insurer carrying on the business of life-insurance shall invest and at all times keep invested his controlled fund (other than funds relating to pension and general annuity business and unit linked life insurance business) in the following manner:
| S.No | Type of Investment | Percentage | |
|---|---|---|---|
| i) | Government Securities | 25% | |
| ii) | Government Securities or other approved Securities (including (i) above) | Not less than 50% | |
| iii) | Approved Investments as specified in Schedule I | ||
| a) | Infrastructure and Social Sector
Explanation: For the purpose of this requirement, Infrastructure and Social Sector shall have the meaning as given in regulation 2(h) of Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations, 2000 and as defined in the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural and Social Sector) Regulations, 2000 respectively. | Not less than 15% | |
| b) | Others to be governed by Exposure norms as specified in regulation 5. Investment in "other than approved Investments" can in no case exceed 15% of the fund | Not exceeding 35% | |
(2) 'Pension and General Annuity Business': Every insurer shall invest and at all times keep invested funds belonging to his Pension Business, General Annuity Business in the following manner:-
| Sl.No. | Type of Investment | Percentage |
|---|---|---|
| (i) | Government Securities, being not less than | 20% |
| (ii) | Government Securities or other approved securities (inclusive (I) above, being not less than) | 40% |
| (iii) | Balance to be invested in Approved Investments as specified in Schedule I and to be governed by Exposure/Prudential Norms specified in Regulation 5 | Not exceeding 60% |
Note : For the purposes of this sub-regulation no unapproved investments shall be made.
(3) 'Unit Linked Life Insurance Business': Every insurer shall invest and at all times keep invested his segregated fund of unit linked life insurance business as per pattern of investment offered to and approved by the policyholders. Unit Linked policies may only be offered where the units are linked to categories of assets which are both marketable and easily realizable. However the total investment in other than approved category of investments shall at no time exceed 25% of the fund.
"4. Regulation of Investments
4(1) General Business: Without prejudice to Section 27 or Section 27B of the Act, - Every insurer carrying on the business of general insurance shall invest and at all times keep invested his total assets in the manner set out below:
| S.No | Type of Investment | Percentage | |
|---|---|---|---|
| i) | Central Government Securities being not less than | 20% | |
| ii) | State Government securities and other Guaranteed Securities including (i) above being not less than | 30% | |
| iii) | Housing and Loans to State Government for Housing And Fire Fighting equipment, being not less than, (Subscription to/purchase of Bonds/debentures issued by HUDCO, National Housing Bank or House building institutions duly accredited by National Housing Banks, for house building activities, duly guaranteed by Government or carrying current rating of not less than 'AA' by independent, reputed and recognised rating agencies would also qualify for compliance of this regulation.) | 5% | |
| iv) | Investments in Approved Investments as specified in Schedule II | ||
| a) | Infrastructure and Social Sector
Explanation: For the purpose of this requirement, Infrastructure and Social Sector shall have the meaning as given in regulation 2(h) of Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations, 2000 and as defined in the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural and Social Sector) Regulations, 2000 respectively. | Not less than 10% | |
| b) | Others to be governed by Exposure Norms specified in regulation 5 so however that investment in "other than approved investments" can in no case exceed 25% of the assets. | Not exceeding 55% | |
(2)Reinsurance Business: Every reinsurer carrying on reinsurance business in India shall invest and at all times keep invested his total assets in the same manner as set out in sub-regulation (1), until such time separate regulations in this behalf are made by the Authority.
Note : For the purpose of the regulations 3 and 4:
Every insurer shall endeavor to maintain a proper balance between the investments made in infrastructure sector and those in the social sector. Bonds issued for development of these sectors, duly guaranteed by Government or otherwise rated not less than "AA" by independent, reputed and recognised rating agencies, issued by others would qualify for compliance of this regulation.
All investment in assets/ instruments, which are capable of being rated as per market practice, be based on rating of such assets/ instruments.
The rating should be by an independent, reputed and recognised Indian or foreign rating agency.
The assets/ instruments under consideration for investment, shall be of a grade not less than "AA" of investment grade as per their current rating. In case Investments of this grade are not available to meet the investment requirements of the investing insurance company and investment committee of the investing insurance company is fully satisfied about the same, then, for the reasons to be recorded in the investment committee's minutes, the investment committee may approve investment in instruments carrying current rating of not less than +A. Investments in the +A to be kept to the minimum.
The rating of Debt Instruments issued by all India financial institutions recognised as such by RBI may be of 'AAA' or equivalent rating. In case investment of this grade are not available to meet the requirements of the investing insurance company and investment committee of the investing insurance company is fully satisfied about the same, then, for the reasons to be recorded in the investment committee's minutes, the investment committee may approve investments in instruments carrying current rating of not less than 'AA' or equivalent as rated by an independent, reputed and recognised Indian or foreign rating agency.
No investment shall be made in an asset/ instrument, which is capable of being rated as per market practice but has not been rated.
Investments in equity shares listed on a recognised stock exchange should be made in actively traded and liquid instruments viz., its trading volume does not fall below ten thousand units in any trading session during the last 12 months or trading value of which exceeds Rs. 10 lacs in any trading session during last 12 months."
For the existing regulation 5 the following shall be substituted:-
