TaxTMI 
TaxTMI 
Foreign Exchange Management (Insurance)Regulations, 2000
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....anges effected in the revised GIM Sr. No. Subject matter Changes 1. Scope of Memorandum The earlier instructions of GIM covered only public sector general insurance companies. The present instructions contained in the Memorandum are applicable to public sector general insurance companies as well as general insurance companies which are registered with IRDA. 2. Reinsurance Arrangement The reinsurance arrangement of public sector general insurance companies registered with IRDA are to be decided by the respective Boards of the insurance companies and IRDA is to be kept informed. ADs designated by these insurance companies are now permitted to make remittances falling under such approved reinsurance arrangements without reference to the Bank. 3. Remittance of Reinsurance Premia by local brokers ADs have been permitted to allow remittance of reinsurance premia by local brokers of insurance companies after verifying debit notes from the overseas insurance company, statement of account and CA's certificate of broker certifying the sum etc. 4. Foreign currency accounts abroad Public sector general insurance companies and general insurance companies registered with IRDA ....
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....ated as resident in India for purposes of transactions in Indian rupees. Payment of claims to such persons against marine or non-marine policies may be freely made in rupees. Payments in foreign currency towards claims under marine or non- marine policies will require prior approval of Reserve Bank, except where premiums thereon were also collected in foreign currency. 7. The Memorandum is divided into four parts as under PART A - MARINE INSURANCE PART B - NON-MARINE INSURANCE PART C - REINSURANCE PART D - FOREIGN CURRENCY ACCOUNTS AND INVESTMENTS ABROAD PART A - MARINE INSURANCE Currency in which Marine Policies may be issued A.1 (i) Marine insurance policies on coastal shipments may be issued only in Indian rupees. (ii) Marine insurance policies on shipments between India and other countries as also between two points outside India may be issued in rupees or in any foreign currency Premiums on Marine Policies covering Exports A.2 Payment of premium on a marine insurance policy on exports from India may be accepted in rupees provided exporter furnishes to the insurer a certificate to the effect either (a) that insurance charges on the shipment in question ha....
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....er (in duplicate) furnishing full particulars. Premiums on Marine Policies covering Shipments between Countries outside India A.4 (i) Premiums on marine insurance policies covering shipments between countries outside India must ordinarily be received in foreign currency, but payment in rupees may be accepted provided a certificate from an authorised dealer in foreign exchange is produced to show that the rupees are derived by a remittance from abroad in an approved manner. NOTE: Overseas offices of the Insurers may grant marine insurance cover for trade between China and third countries and receive premium/settle claims through foreign currency accounts maintained by their overseas offices without prior approval of Reserve Bank. * Sometimes, firms and companies in India finance merchanting trade i.e. goods shipped from one foreign country to another and financed by an intermediary in India. In some of these cases goods may be purchased on f.o.b./c.& f. terms and/or sold on c.i.f. terms, the marine insurance cover being arranged by the intermediary in India. Insurance companies registered with IRDA may issue policies covering transit risks between the loading and the destinat....
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....e settled through the overseas claims settling agents, if so desired by insurers. Authorised dealers have been permitted to open revolving letters of credit in favour of established claims-settling agents abroad and reimburse claims under the credit on verification of the necessary documentary evidence viz. statement of claim, survey report or other documentary evidence of loss/damage, original policy or certificate of insurance etc. Payment in Foreign Currency of certain Import Claims A.7 Although it is a basic rule that marine claims on imports should be settled locally in rupees in favour of importer in cases where ownership of the goods lost, damaged, etc. vests in the importer, Insurers may settle claims from their foreign currency balances in favour of overseas suppliers in the following categories of imports, in order to facilitate early replacement of the lost, damaged, etc. goods, on request being received in this regard from importers: * Imports by Government Departments and public sector undertakings * Imports by private sector undertakings against foreign credits provided the terms of the foreign credit require that insurance cover should be taken in foreign cur....
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....ts by RBI. For such requests where RBI grants specific approval for issue of policy in foreign currency, acceptance of premium in foreign currency and settlement of claim in foreign currency, insurers may approach A.D. for remittance of claims under policies subject to the following conditions :- * the policy has been issued in foreign currency with specific approval of RBI; * the claim has been admitted by the competent authority of the insurance company. * the claims has been settled as per the surveyors report and other substantiating documents; * claims on account of reinsurance are being lodged with the reinsurers and will be received as per reinsurance agreement; * the remittance is being made to the non-resident beneficiary under the policy. For resident beneficiaries the claim may be settled in Rupee equivalent of foreign currency due. Under no circumstances payment in foreign currency be made to a resident beneficiary. B.3 (ii) Insurers may submit, to the Regional Office of RBI under whose jurisdiction it operates, a report on quarterly basis of the claims settled in foreign currency along with supporting documents of each claim settled by them. These repor....
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....accident cover from Indian Insurers for the workmen and technical staff actually engaged in the overseas contracts providing for settlement of claims in foreign currency. Insurers may permit such insurance being taken provided premiums will be paid by remittances in foreign currency from out of the foreign currency earnings generated by the contracts. Claims in such cases may be settled in foreign currency or if so desired, in rupees locally. Overseas Medical Insurance Scheme for Indians Travelling Abroad B.7 Policies may be issued in India under the Overseas Medical Insurance Schemes as approved by Reserve Bank to Indian residents travelling abroad for any approved visits viz. business, study tour, specialised training, conferences, employment or higher studies. Premiums on such policies, other than for visits for employment, may be collected in rupees and for employment in foreign currency. Insurers may also open a revolving letter of credit with an Indian bank in London for settlement of its share in the claims that may eventually arise under the policies. Miscellaneous B.8 (i) Insurers may issue product liability policies for exports and Errors and Omissions Policy in resp....