by In these Regulations, unless the context otherwise requires,
(i) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) The words and expressions used but not defined in these Regulations shall have the same meaning respectively assigned to them in the Act.
Permission to take or hold a general insurance policy issued by an insurer outside India:
(i) A person resident in India may take or continue to hold a health insurance policy issued by an insurer outside India provided aggregate remittance including amount of premium does not exceed limit prescribed under the Liberalised Remittance Scheme.
(ii) No person shall take out or renew any policy of insurance in respect of any property in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India without permission of Insurance Regulatory and Development Authority of India (IRDA).
(iii) A person resident in India may take or continue to hold a general insurance policy other than referred in (i) and (ii) above, issued by an insurer outside India, provided that, the policy is held, under a specific or general permission of the Central Government.
(iv) A person resident in India may continue to hold any general insurance policy issued by an insurer outside India when such person was resident outside India.
Provided further that where the premium due on a general insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, within a period of seven days from the receipt thereof.
Permission to take or hold a life insurance policy issued by an insurer outside India
(i) A person resident in India may take or continue to hold a life insurance policy issued by an insurer outside India, provided that, the policy is held, under a specific or general permission of the Reserve Bank of India.
(ii) A person resident in India may continue to hold any life insurance policy issued by an insurer outside India when such person was resident outside India.
Provided further that where the premium due on a life insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, within a period of seven days from the receipt thereof.
Export-Import Insurance
General insurance business in India is the monopoly of General Insurance Corporation of India (GIC) and its subsidiaries. Life insurance business is the monopoly of Life Insurance Corporation of India (LIC). Exchange Control regulations governing general and life insurance business in India are set out in two separate Memoranda (GIM and LIM).
Marine Insurance on Exports
GIC has been permitted to accept premiums in rupees from exporters against export of goods from India on production of certificate from them to the effect that:
- The insurance charges on the shipment in question have to be borne by exporter in terms of the contract with overseas buyer and that he is not making the payment on behalf of any non-resident;
- The exporter is defraying the insurance charges on the shipment in question on account of overseas buyer of the goods and that he undertakes to add the amount on the invoice and recover the payment so made from the buyer in an approved manner.
Marine Insurance on Imports
GIC has been permitted to accept premiums in rupees from importers against import of goods into India on production of a certificate from them to the effect that:
- The insurance charges on the shipment in question have to be borne by importer in terms of the contract with the overseas seller,
- Where the import is covered under an import licence, he undertakes to ensure that the amount of insurance premium paid will be endorsed on the import licence in due course.
Claim against Marine insurance Policies
- GIC and its subsidiaries have been permitted to settle claims against marine insurance policies covering exports from India out of foreign currency balances held by them, provided they are satisfied that ownership of the goods lost, damaged, etc. vests in such claimant and that the latter is not making the claim merely as agent of the real owner of the goods in India. In cases where the funds held by the insurers abroad are inadequate, claims will have to be settled by remittance from India. Authorised dealers may permit such remittances without reference to Reserve Bank, on application from insurers on form A2 together with documents listed in paragraph A.7 of Memorandum GIM after verifying that the statement of claim has been duly completed and signed by an authorised official of the insurer and that the remittance is prima facie in order. Where any document is not produced in original, an explanation for the insurer’s inability to do so should be obtained. In all cases, the statement of claim (form GIM1) should be enclosed to form A2 and submitted to Reserve Bank with appropriate R Return. The other documents may be returned to the applicant insurer after marking them.
- GIC and its subsidiaries may sometimes make arrangements with overseas claims-settling agents for facilitating speedy settlement of claims relating to exports from India. In such cases, authorised dealers may on receipt of requests from GIC/its subsidiaries, open revolving letters of credit in favour of established claims-settling agents abroad providing payment against production of documentary evidence viz. statement of claim, survey report or other documentary evidence of loss/damage, original policy or certificate of insurance, etc. Reimbursement of claims under the credit may be made by authorised dealers on verification of the required documents.
- Where GIC and its subsidiaries have settled claims against marine insurance policies covering exports from India in favour of Indian exporters, authorised dealers may allow remittance of claims by Indian exporters to overseas buyers on production of documentary evidence in support of the claim, provided export proceeds have been realised in full by the exporter. A declaration from the Indian exporter that the overseas buyer has not been compensated in any other manner for the loss of/damage to goods exported from India in respect of which claim has been settled by GIC or its subsidiary, should also be obtained.
