TMI BlogForeign Exchange Management (Insurance)Regulations, 2000X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 dated September 12, 2002] Major changes effected in the revised GIM Sr. No. Subject matter Changes 1. Scope of Memorandum The earlier instructions of GIM covered only public sector general insurance companies. The present instructions contained in the Memorandum are applicable to public sector general insurance companies as well as general insurance companies which are registered with IRDA. 2. Reinsurance Arrangement The reinsurance arrangement of public sector general insurance companies registered with IRDA are to be decided by the respective Boards of the insurance companies and IRDA is to be kept informed. ADs designated by these insurance companies are now permitted to make remittances falling under such approved reinsurance arrangements without reference to the Bank. 3. Remittance of Reinsurance Premia by local brokers ADs have been permitted to allow remittance of reinsurance premia by local brokers of insurance companies after verifying debit notes from the overseas insurance company, statement of account and CA's certificate of broker certifying the sum etc. 4. Forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epal and Bhutan 6. Indians, Nepalese and Bhutanese resident in Nepal and Bhutan as well as offices and branches of Indian, Nepalese and Bhutanese firms, companies or other organisations in these two countries are treated as resident in India for purposes of transactions in Indian rupees. Payment of claims to such persons against marine or non-marine policies may be freely made in rupees. Payments in foreign currency towards claims under marine or non- marine policies will require prior approval of Reserve Bank, except where premiums thereon were also collected in foreign currency. 7. The Memorandum is divided into four parts as under PART A - MARINE INSURANCE PART B - NON-MARINE INSURANCE PART C - REINSURANCE PART D - FOREIGN CURRENCY ACCOUNTS AND INVESTMENTS ABROAD PART A - MARINE INSURANCE Currency in which Marine Policies may be issued A.1 (i) Marine insurance policies on coastal shipments may be issued only in Indian rupees. (ii) Marine insurance policies on shipments between India and other countries as also between two p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case of imports by the public sector (viz. Central Government, any State Government, Statutory or public bodies and Government undertakings), payment of insurance premium in rupees may be freely accepted. (iii) In all other cases, where payment of premium in respect of imports is offered in rupees, prior approval of Reserve Bank will be required. Applications for the purpose should be made by letter (in duplicate) furnishing full particulars. Premiums on Marine Policies covering Shipments between Countries outside India A.4 (i) Premiums on marine insurance policies covering shipments between countries outside India must ordinarily be received in foreign currency, but payment in rupees may be accepted provided a certificate from an authorised dealer in foreign exchange is produced to show that the rupees are derived by a remittance from abroad in an approved manner. NOTE: Overseas offices of the Insurers may grant marine insurance cover for trade between China and third countries and receive premium/settle claims through foreign currency accounts maintained by their overseas offices without prior approval of Reserve Bank. Sometimes, fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to foreign buyer, if a request to that effect has been made by the non-resident claimant. A certificate indicating full particulars of the transaction including number of relative GR/PP form and amount paid in settlement of claim should be issued to the exporter to enable the latter to obtain necessary approval from Reserve Bank for making replacement shipments. Claims against marine insurance policies covering exports may also be settled through the overseas claims settling agents, if so desired by insurers. Authorised dealers have been permitted to open revolving letters of credit in favour of established claims-settling agents abroad and reimburse claims under the credit on verification of the necessary documentary evidence viz. statement of claim, survey report or other documentary evidence of loss/damage, original policy or certificate of insurance etc. Payment in Foreign Currency of certain Import Claims A.7 Although it is a basic rule that marine claims on imports should be settled locally in rupees in favour of importer in cases where ownership of the goods lost, damaged, etc. vests in the importer, Insurers may settle claims from their foreign currency b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned to India from abroad after a minimum continuous stay abroad for at least one year or out of funds held in their RFC accounts with authorised dealers in India. Issue of foreign currency policies in other cases will require prior approval of Reserve Bank. Policies in foreign currency approved by Reserve Bank- Settlement of claims B.3(i) Request for issue of policies in foreign currency which are not covered by the above guidelines are examined on merits by RBI. For such requests where RBI grants specific approval for issue of policy in foreign currency, acceptance of premium in foreign currency and settlement of claim in foreign currency, insurers may approach A.D. for remittance of claims under policies subject to the following conditions :- the policy has been issued in foreign currency with specific approval of RBI; the claim has been admitted by the competent authority of the insurance company. the claims has been settled as per the surveyors report and other substantiating documents; claims on account of reinsurance are being lodged with the reinsurers and will be received as per reinsurance agreement; the remittance is being made to the non-resident ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal accident policies may be issued in foreign currency, provided premiums thereon are paid either in foreign currency or in rupees derived by surrender of foreign currency to an authorised dealer or authorised money-changer. Claims in these cases may be settled in currency of the policy or in rupees as desired by the policy holder. NOTE: Indian companies executing construction and turnkey contracts in foreign countries may at times desire to obtain personal accident cover from Indian Insurers for the workmen and technical staff actually engaged in the overseas contracts providing for settlement of claims in foreign currency. Insurers may permit such insurance being taken provided premiums will be paid by remittances in foreign currency from out of the foreign currency earnings generated by the contracts. Claims in such cases may be settled in foreign currency or if so desired, in rupees locally. Overseas Medical Insurance Scheme for Indians Travelling Abroad B.7 Policies may be issued in India under the Overseas Medical Insurance Schemes as approved by Reserve Bank to Indian residents travelling abroad for any approved visits viz. business, study tour, specialised tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insurance companies, to the effect that the proposed remittance of reinsurance premia sought, is in agreement with the various statements/certificates obtained from the insurance company/companies. PART D - FOREIGN CURRENCY ACCOUNTS AND INVESTMENTS ABROAD Foreign Currency Accounts Abroad D.1 Insurers may open, hold and maintain with a bank outside India foreign currency accounts for facilitating transactions and expenses relating/incidental to general insurance business undertaken in foreign countries in accordance with regulations laid down in this Memorandum. Insurers should endeavour to keep in their foreign currency accounts only the minimum balances required for normal business and transfer to India regularly all surplus funds held at foreign centres. Investments abroad D.2 Renewal of existing investments, reinvestment of redemption proceeds of existing investments and fresh investment out of funds abroad, in government/semi-Government securities and bank deposits may be made by Insurers freely without prior approval of Reserve Bank, provided they are for meeting statutory requirements in the foreign country concerned. All other investments will require pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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