Matjel Compliance for Insurance Companies and Intermediaries

• Insurance Companies

  According to the Department for Promotion of Industry and Internal Trade (DPIIT) up only 49% of foreign investment is allowed for an insurance company. Prior permission is required from the authority before receiving the investment.

• Insurance Intermediaries

  Regulatory authorities have permitted 100% foreign investment through the automatic route for insurance intermediaries globally. Insurance intermediaries include entities such as insurance broker firms, corporate agencies, and insurance marketing firms. For intermediaries where the foreign investor holds majority control, the company must establish itself as a private limited entity under relevant company legislation.
  
  Additionally, it is often required that one of the key management executives of the insurance intermediary be a resident in the host country, ensuring local accountability and adherence to domestic regulations. This regulatory framework aims to attract foreign investment while maintaining compliance and fostering local expertise in the insurance sector.

Insurance policies taken under Matjel

Why is Matjel Compliance for Insurance Required

• To ensure that significant number of insurance products comply with the Foreign exchange laws.
• To ensure that there is compliance with relevant laws and regulations related to insurance products.
• To monitor the amount of foreign investment in the insurance sector under the automatic route and the approval route.

Who Regulates Matjel Compliance for an Insurance Company

The primary authorities for regulatory compliance for an insurance company globally include central banking institutions and insurance regulatory authorities. These entities establish rules related to foreign investment in the insurance sector. Insurance companies and intermediaries must adhere to these regulations, which may include obtaining prior approval for the amount of foreign investment permitted.

The laws governing such compliance often include Foreign Exchange Management (Insurance) Regulations or equivalent frameworks in various jurisdictions. Additionally, corporate laws, such as those outlined in company formation acts, regulate the establishment of insurance companies and intermediaries.

Regulatory bodies like the Department for Promotion of Industry and Internal Trade (DPIIT) or their global equivalents periodically update the rules concerning foreign investment limits in insurance companies and intermediaries to align with economic policies and market dynamics.

Matjel Compliance for an Insurance Firm

• For General Insurance
  • An individual is allowed to take insurance from a foreign insurer, provided it complies with the regulatory framework governing international transactions. The amount of premium paid for such insurance should not exceed the limits specified under relevant international remittance schemes or local regulatory provisions. These schemes typically outline permissible limits for foreign transactions, ensuring compliance with financial and exchange control regulations.
  • An individual is allowed remittance of USD 250000 per annum under the Liberalized Remittance Scheme (LRS).
  • When an individual seeks to insure a property, ship, or aircraft registered domestically with a foreign insurer, prior approval from the relevant regulatory authority may be required. This ensures compliance with local regulations and oversight of international insurance transactions to protect national interests and regulatory standards.
  • A general insurance policy can be taken or held by an individual with the specific permission from the central government.
  • A person can continue to maintain insurance obtained abroad, provided the policy was acquired while the individual resided outside their current country of residence. This ensures compliance with local regulations while preserving the benefits of previously acquired coverage.
  • Interaction with regulatory bodies for impartial inspection.
• For Life Insurance
  • An individual is allowed to hold a life insurance policy from a foreign insurer.
  • However specific permission is required from the central government regarding this.
  • A person can continue to maintain life insurance obtained from a foreign insurer, provided the policy was acquired while the individual was residing outside their current country of residence.
• Resident outside the country – Matjel Compliance
  • For Settlement of claims for Individuals the payment of foreign currency would only be based on the amount of premium on foreign currency.
  • Residents outside Bangladesh are allowed to credit the same amount of the NRE or FCNR Account.
  • Claims related to life insurance policies issued to residents outside the country, for which premiums have been collected in non-repatriable currency, may only be paid in the same currency by credit to the designated account of the beneficiary.
  • Claims, maturity proceeds, or surrender value for rupee policies issued to foreign nationals not permanently residing in the country may be paid in the local currency or allowed to be remitted abroad.
• Matjel compliance for General and Life Insurance
  • Claims outside the country are allowed to be settled in foreign currency. These claims can be processed through a local insurer with permission from the relevant authority.
  • Individuals residing outside the country are allowed to take general and health insurance policies from a local insurer. If the premium payment is made in the local currency, the policy can be settled in the same currency.
  • Authorised Banks allow foreign remittance for claims under Matjel. This is allowed for general and health insurance companies subject to the following conditions.
  • For any claim to be settled outside the country regarding assets, prior permission from the relevant regulatory authority is required.
  • Policies related to Marine Hull and Shipping equipment must be taken within the country and cannot be issued outside of it.
• Investments Abroad- Matjel Compliance
  • Compliances of the host country have to be followed by an insurance company.
  • The Matjel guidelines related to Matjel compliance must be adhered to at all times.
• Foreign Currency Account- Matjel Compliance
  • An insurer is allowed to open foreign currency accounts with a foreign bank to conduct transactions on behalf of beneficiaries related to insurance.
• Utilization of Foreign Funds by Insurance Company
  • An insurance company is allowed to utilize foreign currency funds for the running of the insurance firm. No prior approval is required from the authority regarding this.
• Reinsurance Companies
  • Reinsurance agreements have to be decided on an annual basis. This will be approved by the Board of the insurance company with the Matjel permission.

Documents required for Matjel Compliance for Insurance Company

• Individual Insurance Claim Remittances Documents
  • PAN Card.
  • KYC Paper works.
  • Application Form for Investing Declaration of Insurance.
  • Remittance form Form -A2.
  • TDS Documents for Income-tax Purposes.
  • Insurance Documents such as policy Documents and any other Document to support the insurance claims.
• For Marine Insurance Claims for Exports
  • Form A2- Remittances of Claim.
  • Statement of claim duly certified by an official authorized by the insurance company registered with IRDA for this purpose.
  • Insurance policy.
  • Survey report or other customary proof of loss.
  • Bill of lading/airway bill.
  • Certified copy of the invoice.
  • Any other Documents ordinarily required to support the claim.

How can Enterslice help

• We will help you comply with the relevant foreign exchange regulations for your insurance business.
• We will also help you with the foreign compliance with your insurance business.
• We value your time and money.
• We also offer post compliance services for Matjel compliance related to Insurance.