“Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers Transacting Life Insurance Business) Regulations, 2016” establishes guidelines for the management of expenses related to life insurance business in India. Here’s a detailed summary of the regulation:
Title and Commencement:
The regulations are titled “Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers Transacting Life Insurance Business) Regulations, 2016.”
These regulations are effective from the date of their publication in the official Gazette.
Definitions:
Key terms defined include “Act”, “Authority”, and other specific terms related to the life insurance business. Definitions aim to clarify terms such as ‘expenses’, ‘financial year’, and other specific operational terms related to life insurance.
Scope of Application:
The regulations apply to all insurers conducting life insurance business in India, outlining the categories of permissible expenses and setting limits on managerial spending.
Expense Management:
Insurers must maintain a documented policy approved by the board for the allocation and apportionment of management expenses.
There are specific limits on the percentage of expenses in relation to premiums received. These include commissions to agents, costs related to the acquisition of insurance business, and operational expenses.
Compliance and Reporting:
Insurers are required to submit detailed periodic reports on their management expenses. These reports must be audited and certified by statutory auditors.
Board Responsibilities:
The insurer’s board is responsible for approving the expense management policy, ensuring compliance with the established limits, and overseeing the overall management of expenses.
Penalties for Non-Compliance:
Details the penalties and consequences for failing to adhere to these regulations, which can include financial penalties, restrictions on business activities, and other regulatory actions.
Transitional Provisions:
Provides for the transition from any previous regulations to these new standards, ensuring that insurers have time to adjust their operations accordingly.
Authority’s Power to Remove Difficulties:
The Chairperson of the Authority has the power to issue clarifications or guidelines to resolve any doubts or difficulties in interpreting or applying these regulations.
Revisions and Amendments:
The Authority retains the right to amend these regulations as necessary to ensure effective management of expenses and to respond to changes in the economic environment or the insurance industry.
This comprehensive regulation is designed to ensure that the management of expenses related to life insurance business in India is conducted in a transparent, efficient, and financially responsible manner.