Draft IRDAI (Surety Insurance Contracts) Guidelines, 2021

Sep 09, 2021 | by Avantis RegTech Legal Research Team

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Industry Specific Compliance

The Insurance Regulatory and Development Authority of India (IRDAI) on September 08, 2021 has issued the Draft IRDAI (Surety Insurance Contracts) Guidelines, 2021. The objectives of the proposed guidelines are to promote and regulate sustainable and healthy development of Surety Insurance Business in India.

The foremost guidelines are as followed:

• Scope and Applicability:

o No person shall, after the commencement of these guidelines, transact the business of Surety Insurance in India unless the person is an Indian Insurance Company as defined in Section 2 (7A) of the Insurance Act, 1938.

o All Insurers registered under the insurance Act, 1938 to transact the business of general insurance may conduct the business of Surety Insurance subject to compliance with eligibility criteria as set out in these guidelines.

o Any applicant intending to commence Surety Insurance business can do so by applying for grant of certificate of registration in accordance with IRDA (Registration of Indian Insurance Companies) Regulations, 2000 and amendments thereof. However, the preference to grant certificate of registration shall be given to the applicant whose promoters are already engaged in carrying out Surety Insurance Business in any jurisdiction.

o The applicant who desires to register as specialized/monoline insurer for offering Surety Insurance may also underwrite trade credit insurance subject to the trade credit insurance guidelines and additional capital requirement as may be prescribed by the Authority.

o These Guidelines are complementary to the provisions of any other laws, rules, regulations or guidelines, for the time being in force.

o The Surety Insurance products shall be subject to all provisions and relevant procedures of File & Use as stipulated under the Guidelines on Product Filing Procedures for General Insurance Products to the extent that such provisions are not inconsistent with the provisions of these Guidelines.

• Compliance with Laws:

Surety Insurance contracts shall be issued in compliance with applicable laws. Surety Insurance contracts cannot be issued where the underlying assets / commitment are/is outside India. Further, the payment for risk covered under the surety insurance contracts shall also be made in Indian rupees.

• Maintenance of Centralized Data Base:

The database of the Surety Insurance contracts underwritten by all general insurers shall be centralized at Insurance Information Bureau of India (IIBI). Every insurer shall furnish the customer-wise data and exposures to IIBI as may be specified.

• Maintenance of information and reports:

The insurers shall maintain the relevant records and data pertaining to surety insurance business and submit to the Authority as and when requisitioned.

Stakeholders are requested to give their comments / suggestions through e-mail to nl [email protected] with a copy to Mr A. Rama Sudheer, Manager ([email protected]) before September 28, 2021.

[Circular No. IRDAI/NL/WG/SB/299/2021-22]

 


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