IRDA has issued guidelines for the insurance companies to open their branches overseas. However, insurance companies that are in operations for at least three years can only seek approval for opening overseas branches.
Earlier, some insurance companies had approached IRDA seeking permission to open branches outside India.
IRDA has now stipulated that the registered insurance companies must have good track record in terms of profitability and not suffered any adverse reportsfor at least three years out of the last five years from the date of application.
A minimum networth of Rs 250 crore is required for general insurance companies to open their branch in foreign countries while for life insurance companies and reinsurance companies the net worth requirement is Rs 500 crore and Rs 750 crore respectively. IRDA has also asked life and non-life companies to meet prescribed solvency before applying for a new branch in any foreign country.
The insurance regulator has asked the companies to comply with the host country solvency requirement, FEMA, KYC and AML guidelines.
However, not all insurance companies are pursuing overseas expansion plan. Krishnamoorthy Rao, CEO of Future Generali General Insurance said “We are not keen to open new branches as our joint venture Generali group is already established outside India.” He said that some public sector insurance companies might be interested in opening branches in various emerging markets.
In the guidelines, IRDA has defined the foreign insurance company as a company registered outside India whose paid up capital is subscribed by an Indian insurance company and shall include a foreign subsidiary company wherein the domestic insurance company has a holding of more than 50 percent or is in a position to control the composition of its board of directors.