Regulations on expenses of management consolidated
To promote a favorable business environment and empower Board of Directors (“Board”) of insurers in taking operational decisions with sufficient flexibility, IRDAI issued IRDAI(Expenses of Management(“EoM”), including Commission, of Insurers) Regulations, 2024 (“EOM Regulations”)1. They apply to insurers transacting life insurance business, general insurance business or health insurance business in India. The EOM Regulations repeal and consolidate 3 (three) regulations.2
Subsequently, a master circular was issued to supplement the EOM Regulations.3 It applies to life, general and health insurers. Some of the key provisions of the master circular are as follows:
1. every insurer must formulate a policy, approved by the Board, for payment of commission;
2. every insurer must prepare a business plan, which will be monitored by the Board at regular intervals;
3. every insurer must place the return and the statutory auditor's certificate before the Board for approval. The return of EoM and specified documents duly adopted by the Board as well as the certified true copy of the minutes approving these documents must be filed with IRDAI along with the annual financial statements; and
4. every insurer must place the return on payment of commission before the Board for approval and submit the same to IRDAI.
Footnotes
1. Notification dated January 22, 2024. F. No. IRDAI/Reg/2/196/2024
2. The repealed regulations are IRDAI (EoM of Insurers transacting General or Health Insurance Business) Regulations, 2023; IRDAI (EoM of Insurers Transacting Life Insurance Business) Regulations, 2023; and IRDAI (Payment of Commission) Regulations, 2023.
3. Circular dated May 15, 2024. IRDAI/F&I/CIR/79/5/2024 6 Notification dated March 20, 2024. F. No.
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