Public Comments received on the proposed amendment to IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022

Comments received on the proposed amendment to IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 The consultation paper on captioned regulations seeking comments/ suggestions from the public was issued by IFSCA on May 12, 2026. The following comments / suggestions were received:

Sub- Sr. Reg. Comments / Suggestions / Suggested Regu No. Rationale No. No. modifications /Para No.

1 4 Para 1 The premium to be paid by a person proposing to The IIO has come across instances whereby customers, take an insurance policy (hereinafter referred to as especially High Networth Individuals “HNI”, request for the ‘proposer’) or by a policyholder or by a lending facilitating premium payment through ‘premium financing’.

institution on behalf of the policyholder to an IIO may be made through any of the following Premium financing is an established practice in several manner(s), namely:- international financial centres, whereby a customer obtains financing from a regulated banking institution to pay

(1) recognised instrument of payment using premiums on a life insurance policy. This arrangement is banking channels including payment made generally availed by HNIs and Non-Resident Indians through electronic mode; (NRIs) seeking long-term financial protection solutions

(2) bank guarantee or equivalent instrument without liquidating existing investments. issued by any bank in favour of the IIO for payment How Premium Financing Works of premium, in case the insured fails to make such 1. A customer purchases a life insurance policy from an payment; insurer.

(3) cash deposit (not applicable for premium paid 2. A regulated bank or lending institution provides financing by lending institution on behalf of policyholder); or for the policy premiums.

(4) any other method or manner of payment as 3. Premiums are paid directly by the lender to the insurer. may be specified by the Authority. 4. The customer services the financing facility as per agreed terms.

Explanation – For premium payment by lending 5. The lender may obtain collateral, such as cash deposits, institution on behalf of a policyholder shall be marketable securities, or other eligible assets, depending governed through the arrangement between the on the customer’s profile and the financing structure.

policyholder and the lending institution This arrangement facilitates access to higher insurance coverage without requiring immediate deployment of large amounts of capital thus preserving their existinginvestment portfolios and business assets.

In order to implement the premium finance approach for premium payment, following risk controls may be

evaluated: • Premium financing to be provided only by regulated banking/lending institutions operating within approved regulatory frameworks. • Eligibility shall be restricted to qualified customers meeting prescribed financial criteria.

• Adequate collateral requirements to be maintained by financing institutions. • Clear suitability assessment and documentation requirements • Policy assignment to the bank/lending institution to the extent of outstanding loan We believe that enabling premium payment through premium financing may create a level playing field for IFSC Insurance offices vis-à-vis foreign insurers accepting premium payments through premium financing. It may also help in improving premium collection efficiency while reducing operational challenges considering the premium will directly be paid by banks/financial institutions.

In view of the above, we request the Authority’s guidance on enabling premium financing for payment of insurance premium.

2 2 For the purposes of the substituted definition, The existing Regulations expressly apply to reinsurance references to “contract of insurance”, and include specific provisions governing reinsurance “policyholder” and “insurer” are intended to apply contracts.

equally in the context of reinsurance businesscarried on by an IIO, including that “policyholder” A clarification would ensure that the substituted definition, should be understood to include a cedant. drafted primarily in a direct insurance context, operates consistently within the IFSC reinsurance framework and avoids any ambiguity in interpretation.

3 4 For the purposes of the substituted definition, The IFSC framework permits the use of intermediaries and where premium is received by an authorised delegated arrangements for underwriting and premium intermediary or other authorised entity acting on handling.

behalf of the insurer or reinsurer (including, where relevant, service companies, coverholders, MGAs or reinsurance brokers), and is appropriately accounted for, such receipt may be treated as receipt by the insurer or reinsurer for regulatory purposes 4 4 For the purposes of the substituted definition, the In certain reinsurance arrangements, additional amounts treatment of reinstatement premium, including that may become payable following a loss to restore cover amounts payable to reinstate cover under an under an existing contract. These amounts would arise existing contract are treated as premium payable after inception of the contract and are calculated in line with under the contract, and that their timing and the terms of the contract.

payment are determined in accordance with the contract and the existing provisions of the Regulations.

IFSCA Response: The inputs / comments received from the public consultation were suitably considered. The said inputs / comments along with draft notification towards amendment of IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022, were placed before the Authority in the meeting held on July 24, 2026.

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