IFSCA specifies the manner for payment of premiums by a person proposing to take an insurance policy

Notification No. IFSCA/2022-23/GN/REG032, Dated 12.01.2023

The IFSCA has notified the IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022. The regulations specify the manner for payment of premiums by a person proposing to take an insurance policy or by a policyholder to an IFSC Insurance Office (IIO).

The premium is to be paid by a person proposing to take an insurance policy may be made through any of the following manners namely –

(a) a recognised instrument of payment using banking channels including payment made through electronic mode,

(b) bank guarantee, or equivalent instrument issued by any bank in favour of the IIO for payment of premium, in case the insured fails to make such payment;

(c) cash deposit or

(d) any other manner of payment as may be specified by the Authority.

The objective is to put in place the manner of payment of premiums, assumption of risk etc. Also, criteria for assumption of risk with or without receipt of the premium in advance have been provided. Further, every IIO at all times shall now have a Board approved policy on mitigation of credit risk, inter-alia, indicating therein the downsides of non-payment of premium by the insured.

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