IRDAI Clarifies Norms for Insurer Investments in AIFs

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  • Last Updated on 16 February, 2026

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IRDAI liaison office guidelines

Cir No.IRDAI/F&I/CIR/INV/28/2/2026; Dated: 12.02.2026

The Insurance Regulatory and Development Authority of India (IRDAI) has issued a clarification regarding investments by insurers in Alternative Investment Funds (AIFs) to ensure compliance with statutory restrictions on overseas investments.

The clarification outlines specific documentation and compliance requirements to prevent indirect overseas exposure through AIF structures.

1. Declaration by Insurers Citing Section 27E of the Insurance Act

Insurers investing in AIFs must provide a formal declaration stating:

  • Their inability to participate in overseas investments of the AIF
  • Such restriction arises under Section 27E of the Insurance Act, 1938

This declaration formally records the regulatory limitation applicable to insurers’ investment portfolios.

2. Mandatory Clause in Private Placement Memorandum (PPM)

The AIF’s Private Placement Memorandum (PPM) must include a specific clause stating that:

  • Capital received from the insurer (including proceeds)
  • Shall not be drawn down, utilised, or pledged
  • For any investment outside India

This clause ensures ring-fencing of insurer funds within domestic investments.

3. Certification by Statutory Auditors of AIF

The statutory auditors of the AIF are required to confirm that:

  • Capital contributed by the insurer
  • Has not been invested outside India

This certification strengthens independent verification of compliance.

4. Compliance Certificate from AIF

Insurers must obtain a compliance certificate from the AIF confirming that:

  • All overseas investments of the AIF have been disclosed to the insurer
  • Excusal rights relating to overseas investments were validly invoked for the insurer
  • No costs or expenses related to overseas assets were charged to the insurer

This ensures transparency and protects insurers from indirect exposure to overseas investments.

5. Regulatory Objective

The clarification aims to:

  • Ensure compliance with statutory investment restrictions applicable to insurers
  • Prevent indirect overseas exposure through pooled investment vehicles
  • Strengthen transparency and accountability in AIF structures
  • Enhance monitoring of insurer investments

6. Key Takeaway

Insurers investing in AIFs must ensure strict segregation of their funds from overseas investments through formal declarations, PPM safeguards, auditor confirmations, and compliance certificates, in line with IRDAI’s clarified regulatory framework

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied