The CEOs of all Insurers
Dear Sir / Madam
Sub: IRDA (Investment) (Fourth Amendment) Regulations, 2008– Reg.
As you are aware, a Working Group was set up by the Authority, to review comprehensively the current regulatory and other provisions on Investments of Insurance companies and suggest changes considered necessary in the light of experience gained / the constraints faced by Insurance Companies, as well as the developments in Financial Markets. The Working Group reviewed the statutory provisions on the pattern of Investment, Operational and Policy issues of Investment Regulations and suggested amendments that would provide flexibility to the Authority in the manner of Regulation on Investment of Life and General Insurance Companies. The Group also looked into the concurrent modifications in the formats of the prescribed Returns to reflect the changes.
2. The recommendations of the Working Group have been examined by the Authority in the light of legal provisions and keeping in view the interests of the stakeholders. The implementation of some of the proposals requires appropriate changes in Regulations and evolution of suitable regulatory framework. It was also observed by the Authority while monitoring compliance with the regulations over a period that some of the extant instructions/guidelines also needed clarity and consistency.
3. Accordingly, the Authority has initiated action to amend the provisions of IRDA Investment Regulations 2000 in order to implement the recommendations of the Working Group and also to effect such changes that are considered necessary to clarify the existing regulatory requirements. A copy of the Gazette notification on the amended regulations is available at our website www.irdaindia.org. Insurers are advised to peruse the notification to take the modifications on record for further compliance. For the sake of convenience a brief summary of the changes proposed to be effected in the Regulations is furnished in Annexure – I.
4. Besides the amendment in regulations, it has also been decided to effect some modifications in the extant Guidelines / Circulars on investment portfolio [Annexure-II] and also introduce certain requirement on the Systems / Process of investment in the context of Risk Management requirements. The proposals in this regard are outlined in Annexure – III.
5. Insurers are advised to place the Circular before the Board at the next meeting in order to apprise the Directors of the important changes brought about in the management of investment portfolio. The Board should also be advised of the specific time bound action taken to comply with the requirements on investment systems and process wherever considered necessary.
6. The changes would be effective from the dates indicated therein.
/sd-
C R MURALIDHARAN
MEMBER