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This Master Direction consolidates foreign exchange regulations and operational guidelines for life, health, and general insurance business undertaken by insurers in and outside India. Authorised persons, residents, non-residents, and insurance companies must comply with specified rules for issuing policies, collecting premiums, settling claims, and conducting reinsurance. Insurers must maintain required foreign currency accounts, follow investment norms, and secure approvals for specific foreign exchange transactions as detailed in the text.
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RBI/FED/2015-16/5 FED Master Direction No. 9/2015-16 January 1, 2016 (Updated as on December 07, 2021) (Updated as on November 17, 2016)
To,
All Authorised Persons in Foreign Exchange
Madam / Sir,
Master Direction - Insurance
Issuance of insurance is regulated under sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999, (42 of 1999), read with Notification No.1/2000-RB dated May 03, 2000 and 12(R)/2015-RB, dated December 29, 2015 . These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications.
Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents with a view to implementing the regulations framed.
This Master Direction consolidates the existing instructions on the subject of "Insurance" at one place. Reporting instructions, if any, can be found in Master Direction on Reporting ( Master Direction No. 18 dated January 01, 2016 ).
It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously.
Yours faithfully,
( R. S. Amar ) Chief General Manager
Master Direction - Insurance
INDEX
| Sr. No. | Contents |
|---|---|
| 1. | Introduction |
| 2. | Foreign Exchange Regulations relating to General / Health / Life Insurance from Insurers outside India. |
| 3. | Foreign Exchange Regulations relating to General/ Health Insurance from insurers in India |
| 4. | Foreign Exchange Regulations relating to Life Insurance from insurers in India |
Life insurance and general insurance business in India can be undertaken by insurance companies registered with Insurance Regulatory and Development Authority (IRDA) and as per the regulations notified by Reserve Bank of India under Notification No.1/2000-RB dated May 03, 2000 and 12(R)/2015-RB, dated December 29, 2015 , as amended from time to time.
A person resident in India may take or continue to hold a health insurance policy issued by an insurer outside India provided aggregate remittance including amount of premium does not exceed the limits prescribed by RBI under the Liberalised Remittance Scheme (LRS) from time to time.
Units located in SEZs may take or continue to hold general/health insurance policies from insurers outside India subject to IRDAI Guidelines and Central Government rules provided the premium is paid by the units out of their foreign exchange balances.
No person shall take out or renew any policy of insurance in respect of any property in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India without permission of Insurance Regulatory and Development Authority of India (IRDAI).
Insurance on Indian marine hulls covering All Risks against war and other allied risks (arising out of civil commotion, political or labour disturbances etc.) is required to be obtained only from the Insurers in India.
A person resident in India may take or continue to hold a life insurance policy issued by an insurer outside India, provided that the policy is held under a specific or general permission of the Reserve Bank of India.
A person resident in India may continue to hold any life insurance policy issued by an insurer outside India when such person was resident outside India. If the premium due on a life insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, within a period of seven days from the receipt thereof.
"Person resident in India" and "Foreign Currency" will have the same meaning as defined under Foreign Exchange Management Act, 1999.
“Insurers” means the Indian Insurance Companies as defined in Section 3(9) of The Insurance Laws (Amendment) Act, 2015 and registered with Insurance Regulatory and Development Authority of India (IRDAI) to carry out general/health insurance/reinsurance business in India.
Payment of premium in foreign exchange means and includes payment of premium in foreign exchange and/or payment of premium in INR derived by sale of foreign exchange to an authorised dealer or an authorised money-changer. Appropriate documentary evidence may be insisted upon at the time of accepting payment.
Resident of India may take general/health insurance policy permitted by IRDAI from Indian insurer on payment of premium in INR, where claims arising under the policies outside India are to be settled in foreign currency.
Resident outside India may take general/health insurance policy as permitted by IRDAI from Indian Insurers. Claims arising under the policies are to be settled in INR if payment of premium is in INR and in any currency if payment of premium is in foreign currency. However, Insurance cover on risks inside India (including All Risks Insurance) on assets in India owned by Indian branches/offices of foreign companies, banks, etc., may be issued only in INR.
Indians, Nepalese and Bhutanese resident in Nepal and Bhutan as well as offices and branches of Indian, Nepalese and Bhutanese firms, companies or other organizations in these two countries are treated as resident in India for purpose of transactions in INR. Payment of claims to such persons against general/health insurance policies may be freely made in INR. Payments in foreign currency towards claims under general/health insurance policies will require prior approval of Reserve Bank, except where premium thereon was also collected in foreign currency.
A.D. Banks may allow foreign currency remittance for claims under IRDAI permitted general/ health insurance policies issued by Indian insurers where settlement of claims is assured in foreign currency subject to following conditions.
