The Insurance Regulatory and Development Authority of India on 23rd November 2022, in order to enable and provide flexibility to the insurers to manage their expenses within the overall limits based on their gross written premium to optimally utilize their resources for enhancing benefits to policyholders has notified the Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting life insurance business) Draft Regulations, 2022.
These Regulations shall come into force from 01st April, 2023 and shall remain in force for a period of three years thereafter and it shall be applicable to Insurers transacting the life insurance business in India.
No insurer carrying on life insurance business in India, shall spend in any financial year as expenses of management, an amount exceeding –
- the amount of commission paid to insurance agents and intermediaries or insurance intermediaries in respect of their business transacted in the financial year as may be allowed by the Authority from time to time;
- commission and expenses reimbursed on reinsurance inward; and
- operating expenses of life insurance business.
Further under this regulation, Group insurance business with Regular Premium plans with limited premium payment term and/or pre-determined policy term shall be treated as regular business with due classification into first year premium and renewal premium.
All insurers transacting Life insurance business, at the expiration of each financial year, shall prepare with reference to that year a Return of Expenses of Management as per the format specified under Schedule-I. The Return shall be signed by the Chief Executive Officer, the Chief Financial Officer, the Chief Compliance Officer and Appointed Actuary of the Insurer. The Return shall be certified by the Statutory Auditor of the Insurer and the certificate duly signed by at least one of the statutory auditors shall be filed in the format given in Schedule- II.