Irda norms soon for overseas policyholders

The Insurance Regulatory and Development Authority (Irda), the regulatory body for insurers, is learnt to be working on a set of norms for policyholders getting insured overseas.

According to senior official with an insurance company, there will be a set of criteria for policyholders to ensure a due diligence of the company before they buy a policy.

Also it will be made clear that if at all any dispute arises in any such policy, it will be resolved outside India under the host country's jurisdiction and not under the jurisdiction of Irda.

The due diligence may include a first-hand knowledge of the credential of the company, supervisory authority under which the insurer is being monitored and supervised, and the terms and conditions of the policy.

Officials said with the Reserve Bank of India permitting Indian residents to remit $25,000 annually, many Indian residents are buying insurance policies offered by foreign companies.

While the purchase of insurance policies is not a problem, it is important for the regulator to know the origin of the insurer and the policy so that the policyholder should not get harassed later, a source said.

The RBI had earlier issued a set of norms for resident Indians who were offered deposit taking products from mutual funds and banks operating overseas under the $ 25,000 liberalised fund transfer norm.

The basic norms set out by RBI was that only deposits products offered by credible organisation only will be acceptable to Indian residents.

As a mark of the credibility, these organisations should be rated by international credit rating organisations. Moreover, these entities should clearly specify the regulatory authority under which they are being regulated.

After the RBI relaxed remittance norms, mutual funds based abroad offered schemes to retail investors and even launched India-dedicated funds to attract investments.