“Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011” provides a regulatory framework for the amalgamation and transfer of general insurance business in India. Here’s a detailed summary of these regulations:
General Provisions
Title and Commencement: These regulations may be called the IRDAI (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011, effective from the date of publication in the Official Gazette.
Scope: The regulations apply to all general insurers except wholly-owned government companies under the General Insurance Business (Nationalization) Act, 1972.
Definitions
Key terms such as “appointed date”, “transacting parties”, “transferor insurer”, and “transferee insurer” are defined to clarify the participants and processes in the amalgamation and transfer of insurance business.
Procedures and Requirements
Application Submission: Insurers involved in amalgamation and transfer must submit a detailed application to IRDAI, including the proposed scheme and related documents as specified in an annexure to the regulations.
Considerations for Approval: IRDAI will evaluate the proposed scheme based on its impact on solvency margin, compliance with applicable laws, interests of policyholders, and the overall insurance market’s orderly growth.
In-Principle Approval: If the application meets all requirements, IRDAI may grant in-principle approval, subject to any conditions deemed necessary for ensuring compliance and protecting policyholders’ interests.
Notices and Disclosures
Notice of Intention: A notice of intention to apply for the scheme must be sent to IRDAI one month before the actual application, detailing the nature and reasons for the amalgamation and transfer.
Public Disclosure: Upon receiving in-principle approval, the scheme must be published in a national and a vernacular newspaper, and made available on the insurers’ websites for public inspection.
Final Approval and Implementation
Court/Tribunal Approval: Following in-principle approval, the scheme must be presented to the relevant court or tribunal for final approval.
Effective Date and Binding Nature: The effective date of the scheme will be specified by IRDAI, and from this date, the scheme becomes binding on all stakeholders including policyholders, shareholders, and creditors.
Financial and Operational Impacts
Financial Statements and Reports: Detailed financial statements and reports, including actuarial reports and solvency margins, must be submitted to demonstrate the financial viability of the scheme.
Protection of Interests: Special emphasis is placed on the protection of policyholders’ interests, ensuring that their rights and claims are safeguarded throughout the transition.
Compliance and Monitoring
Ongoing Compliance: During the interim period before final approval, the insurers must continue to operate in compliance with all regulatory requirements.
Regulatory Oversight: IRDAI retains the right to issue directives or require modifications to the scheme to address any issues that arise during its implementation.
Fees
Processing Fees: A fee, calculated as a percentage of the total gross written premium by the transacting entities, must be paid to IRDAI for processing the application.
These regulations ensure a structured and transparent process for the amalgamation and transfer of general insurance business, safeguarding the interests of all stakeholders, particularly policyholders, and maintaining the stability and integrity of the insurance sector.
