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Master Direction - Insurance (Updated as on November 17 2016)

FEMA - 9/2015-16 - Dated:- 1-1-2016 - RBI/FED/2015-16/5 FED Master Direction No. 9/2015-16 January 1, 2016 (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 .....

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ed. 3. 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) . 4. 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 .....

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to Life Insurance from insurers in India 1. Introduction 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. 2. Foreign Exchange regulations relating to General / Health / Life Insurance from Insurer .....

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IRDAI Guidelines and Central Government rules provided the premium is paid by the units out of their foreign exchange balances. iii. 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). A.2 All risk insurance policies Insurance on Indian marine .....

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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. 3. Foreign Exchange Regulations relating to General/ Health Insurance fro .....

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n foreign exchange. 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. 3.3 General/ Health Insurance policies by Indian Residents Resident of India may take general/health insurance policy permitted by IRDAI from Indian insurer on payment of .....

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ll Risks Insurance) on assets in India owned by Indian branches/offices of foreign companies, banks, etc., may be issued only in INR. 3.5 Transaction in Nepal and Bhutan 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 poli .....

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ditions. i) The claim has been admitted by the competent authority of the insurer; ii) The claim has been settled as per the surveyor s report wherever applicable and other substantiating documents; iii) Claims on account of reinsurance are being lodged with the reinsurers and will be received as per reinsurance agreement; iv) The remittance is being made under the policy to the beneficiary who is resident outside India. For resident beneficiaries the claim may be settled in INR equivalent of fo .....

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yment is received in foreign exchange by the Indian exporter; vii) In case of settlement of insurance claims in respect of assets located outside India owned by residents of India, permission of Reserve Bank of India for holding the property had been obtained, (wherever necessary); viii) Claims arising outside India against policies issued under Employers Liability Act and Merchant Shipping Act may be paid in appropriate foreign currency. Remittances will be allowed for meeting specific claims o .....

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be accepted with reasons for non-availability of the original documents. This provision does not apply to remittances for replenishment of foreign currency balances which will require specific approval of Reserve Bank of India. (b) Claims may be settled in INR in favour of Indian exporters even in cases where title to the goods has passed to foreign buyer, if a request to that effect has been made by the claimant resident outside India. A certificate indicating full particulars of the transactio .....

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or other documentary evidence of loss/damage, original policy or certificate of insurance etc. 3.7 Re-Insurance Reinsurance arrangements of the insurers registered with IRDAI are to be decided by the companies themselves on an annual basis, which is to be approved by the respective insurer's Board in compliance with IRDAI Regulations. Authorised dealer, designated by these insurers may allow remittances falling due under such approved reinsurance arrangements by the insurers in accordance w .....

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idual insurer, along with a certificate to the effect that the amount of reinsurance business is within the overall limit approved by the insurer's Board and that the risks covered under the reinsurance arrangements are within the scope of the Reinsurance Programme, approved by the insurer's Board in compliance with IRDAI Regulations. iii) A certificate from the Chartered Accountant of the broker, prepared on the basis of certificates and statements obtained from the insurers, to the eff .....

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ken in foreign countries in accordance with regulations laid down. 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. 3.10 Investments Abroad General/health insurers may invest freely, out of their funds abroad, without prior approval of Reserve Bank of India subject to the following conditions: i. Statutory requirement of host country concerned; and .....

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d in Notification FEMA 5(R)/2016-RB dated April 1, 2016. iii. Not permanently resident' means a person resident in India for employment of a specified duration (irrespective of length thereof) or for a specific job or assignment, the duration of which does not exceed three years. iv. Insurer in India means Life insurers registered with Insurance Regulatory and Development Authority of India (IRDAI) to carry out Life insurance business in India. 4.2 Issuance of policies and collection of prem .....

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he premium is paid out of foreign currency funds or from their income earned in India or repatriable superannuation/ pension fund in India. (iii) Conversion of Rupee policies on the lives of persons resident in India into foreign currency or transfer of records of such policies to a country outside India is not permitted without prior approval of Reserve Bank. b) Residents outside India (i) Insurer in India may issue policies denominated in foreign currency through their offices in India or abro .....

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th the actuarial reserves held against the policies, on the policy holders return to India. Foreign currency policies in such circumstances shall be converted into rupee policies except in cases where the policy has been in force for at least 3 years prior to policy holder s return to India and the policy holder wishes to retain and continue the foreign currency policy. Requests received for payment in foreign currency towards premium on such policies may be permitted by authorised dealers provi .....

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ation to the total premium payable. (ii) Residents outside India who are beneficiaries of insurance claims/maturity/surrender value settled in foreign currency may be permitted to credit the same to NRE/FCNR account, if they so desire. (iii) (a) Resident beneficiaries of the insurance claims/ maturity/ surrender value settled in foreign currency may be permitted to open and credit the proceeds thereof to their RFC (Domestic) Account. (b) The Policy holder Indian residents who were outside India, .....

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unt of the beneficiary. This would also apply in cases of death claims being settled in favour of resident outside India assignees/ nominees. (v) Claims/maturity proceeds/ surrender value in respect of rupee policies issued to foreign nationals not permanently resident in India may be paid in rupees or may be allowed to be remitted abroad, if the claimant so desires. 4.4 Commission to overseas Agents Insurer in India may pay commission to their agents who are permanently resident outside India r .....

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nies registered with IRDAI are to be decided by the companies themselves on an annual basis which is to be approved by the respective insurance company's Board in compliance with IRDAI Regulations. Authorised dealers, designated by these insurance companies may allow remittances falling due under such approved reinsurance arrangements by the insurer in accordance with the terms and conditions laid down by their Boards. 4.6 Foreign Currency accounts Insurer in India may open, hold and maintai .....

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