Guide to Insurance Companies in India

Insurance

Insurance of any manner is all about managing risk. For example, in the life insurance, the insurance company makes an attempt to manage mortality (death) rates among its clients. The insurance company gathers premiums from policy holders, invests that money, generally in low risk investments, and then reimburses this money once the person passes away or if the policy matures. A person known an actuary constantly crunches demographic data to approximate the life of a person. That is why features such as age/sex/etc. all affect the premium that a policy holder has to pay. The higher the chance that a person will have a shorter life span than the average, the higher the premium that person would have to pay. This process is virtually the similar for every other type of insurance, including automobile, health and property.

Types of Insurance
There are numerous major types of insurance policies. Some companies offer the entire suite of insurance, while others focus in specific areas:

  • Life Insurance – Insurance guaranteeing a specific amount of money to a designated beneficiary upon the death of the insured, or to the insured if he/she lives past a certain age.
  • Health Insurance – Insurance against expenses incurred through disease of the insured.
  • Liability Insurance – The miscellaneous kind. This insures the property like automobiles, property and professional/business mishaps.

There are a lot of factors to examine when looking at insurance companies. More than anything, both consumers as well as investors should concern themselves with the insurer’s financial strength and capability to meet ongoing obligations to the policyholders. Poor fundamentals not only point to a poor investment opportunity, but also they obstruct growth. Nothing is worse than insurance customers discovering that their insurance company may not have the financial stability to pay out if it is faced with a huge proportion of claims.

Over the years, there has been a immense shift in the life insurance industry. Instead of offering straight insurance, the industry nowadays tends to sell customers on more investment type products such as annuities. As a result, insurance companies have been able to contend more directly with other financial services companies like mutual funds and investment advisory firms. To benefit from this, many insurance companies even offer services like tax and estate planning.

Insurance Company Registration Procedure

Indian Insurance market has witnessed incredible growth in previous years and expecting the significant growth in the coming years. Today, in India we have in totality of 55 player out of which 24 life insurance companies and 31 non-life insurance companies. In this article, we will have a look on how to register an Insurance company in India.

Every insurer looking for carrying out the business of insurance in India is mandatory to obtain a certificate of registration from the IRDAI before the commencing of business. The pre-conditions for applying for such registration have been laid down under the Insurance Act of 1938 and the different regulations prescribed by the Authority.

Procedure for Registration of Insurance Company:

The registration for an Insurance company  in India is separated into three parts i.e. R1, R2, and R3.

Application for issuing of a requisition for registration:

An applicant who wishes to carry insurance business has to file an application to the IRDAI in form IRDAI/R1 for an issuance of a demand for the registration application. The application should be accompanied by the following documents:

  1. Applicant is a Company incorporated under Companies Act 2013: Certified copy of a MOA and a AOA;
  2. Name, Address or the occupation of the directors;
  3. Certified copy of annual report of the Indian promoters and the foreign investor for the previous last five years.
  4. Certified copy of shareholding agreement among Indian Promoters and the foreign investor of the applicant;
  5. A five-year business plan approved by the Board of Directors.
  • An applicant could file an application for life Insurance or General Insurance company or Health Insurance Business entirely or Reinsurance Business.
  • After receiving the application, the Authority may ask further information or clarification connected to the consideration of an application.
  • After contentment, the Authority may grant approval and applicant then file an additional application in Form IRDAI/R2 for grant of a certificate of registration.
  • The Authority might reject the application for issuance of a requisition for the registration form by recording the reason in writing.
  • An applicant who is distressed by the decision can file an appeal to Securities Appellate Tribunal within a period of 30 days of rejection communication received.

Application for Registration:

Once the authority accepts the application for request, the applicant will apply in Form IRDAI/R2 for grant of a certificate of registration. The application shall contain the following information:

  1. Application for the Life Insurance/General Insurance/Health Insurance: Evidence stating that the paid up equity capital is more than Rs. 100 crores or more;
  2. Application for the reinsurance business: Evidence is stating that the paid up equity capital is more than Rs. 200 crores or more;
  3. An affidavit from the Indian as well the foreign promoters confirming that paid-up equity capital are sufficient after excluding preliminary expenses.
  4. Statement of the shareholding bearing the distinctive number of shares issued to promoters;
  5. If the foreign investment in the applicant, an affidavit from CEO, MD, WTD of Indian developers and the foreign investor certifying that the holding of foreign paid-up equity capital is being calculated as mentioned under Indian Insurance Companies (Foreign Investment) Rules, 2015 read with other rules related to it. Also, foreign promoters can hold up to 49% of the paid up capital of the applicant;
  6. FIPB approval if FDI exceeds the maximum value of 26%;
  7. Certified copy of the published prospectus;
  8. Certified copy of the MOU or the management agreement or the shareholding agreement or the voting agreement or any other agreement entered among the promoters;
  9. Proof of payment of the fees of Rs.5,00,000/-, which is non-refundable;
  10. PCA or PCS certificate confirming compliance of the registration fees, equity share capital

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