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The Insurance Regulatory and Development Authority (IRDA) Wednesday announced the draft norms for amalgamation of general or non-life insurance companies. According to the IRDA, the draft norms were necessitated as there was no provision similar to Section 35 of the Insurance Act that governs the amalgamation and transfers of life insurance companies.

As per the draft norms, on which suggestions have been invited by Feb 22, non-life insurers planning to amalgamate or transfer their business have to give notice of such intention to the IRDA two months in advance.

The notice has to be filed along with the draft agreement, copies of the balance sheet, and reports on the financial condition and the solvency report of an independent actuary on the proposed arrangement or transfer, among other documents.

According to the draft norms, once an application is made to the IRDA with the draft scheme and the latter was satisfied on the need for the transfer it would first issue only “in-principle” approval.

The parties to the deal have to get necessary approvals from the Reserve Bank of India, the Foreign Investment Promotion Board (FIPB) and the concerned high court.

The IRDA can also stipulate other conditions like ring fencing of assets to protect the interest of policy holders.

On completing the various procedures, the IRDA would give the final approval for the new arrangement.

Know more about Non-life Insurance Policies in India.