The Insurance Regulatory and Development Authority ("IRDA") has vide its circular dated 8th January 2007 reviewed the guidelines on Indian Insurance Companies opening liaison offices overseas and has defined a Representative/ Liaison Office as "a place of business to act as a channel of communication between the principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial / trading /industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through the normal banking channel.
Further the IRDA has asked all Indian Insurance Companies registered with the IRDA to seek approval of the Authority for opening representative/liaison offices abroad by applying in Form IRDA – FO-1. Opening of such offices would be subject to the following requirements:
the representative/liaison office would function as an extended arm of the Indian Insurance Company and no underwriting will be done outside India or other than in Indian rupees;
completion of the underwriting contracts would only have to be done in India, though it would be permissible to identify the overseas prospects;
no payment of fees outside the country for lead generation etc.;
Insurer would have to have a good financial strength and would be required to maintain the prescribed solvency requirement.
The track record on market conduct, regulatory compliances, redressal of complaints, etc. would have to indicate that there are no serious adverse features on the functioning of the company on the record of IRDA.
Further the Insurance Companies would be required to furnish information to IRDA on the business mobilized through the representative/liaison office and a certificate that the expenditure incurred at the overseas centre together with the Indian operation is well within the specified limits.
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