“Banks in GIFT City are in the process of becoming corporate agents under the Insurance Act. This means that they will be able to sell insurance products along with their own products. While HDFC and IDFC First Bank and Stock Holding Corporation have already been given licenses, one more application in this regard is pending,” K Rajaraman, chairman of International Financial Services Authority (IFSCA) told the business line during an interaction.
HDFC Bank Ltd, IFSC unit of IDFC First Bank and Stock Holding Securities IFSC Ltd are among the first entities who have become corporate agents in GIFT City. Corporate agents are insurance intermediaries that usually represent an insurance company and take the insurance products to a wider audience.
“There are millions of NRIs and PIOs living all over the world. They usually subscribe to a dollar product. For instance, if an employee in Dubai who has subscribed to an insurance policy from Dubai passes away, the succession will happen under the local Sharia law. The advantage for an NRI buying an insurance product from GIFT City is that the succession will happen under the Indian Succession Act. In other words, the nomination process happens as per Indian law. Moreover, internationally, the customer’s first port of call is the bank. Assuming that an NRI calls up to set up a bank account. Then he will not have to go anywhere for insurance. He just needs to tell the bank and the same will be arranged,” the IFSCA official explained.
According to the Ministry of Foreign Affairs, there are more than 35 million Indians living overseas. Of these 15.85 million are Non-Resident Indians and nearly 19.57 million are People of Indian Origin.
“We are looking to create a wholesome ecosystem. We are also looking at encouraging insurance companies, setting up Global Capability Centres (GCCs) in GIFT City which can accrual services, data processing or underwriting services. We are in talks with a few companies,” Rajaraman added.
Standing Committee on Insurance
Last month, IFSCA had constituted a standing committee on insurance to strengthen GIFT-IFSC’s position as a global insurance hub.
The committee headed by former chairperson of LIC of India MR Kumar has been asked to provide strategic insights and recommendations on regulatory matters, stakeholder engagement, public consultations, and industry best practices.
The Terms of reference of this committee include benchmarking IFSCA regulations with competing IFSCs and advising on issues and enhancements to regulation of Insurance and (Re)insurance at GIFT-IFSC as well as the relevant laws of India. Similarly, it will also benchmark the Ease of Doing Business and Cost of Doing Business in IFSC with reference to other key IFSCs and recommending improvements.
The committee will also provide inputs on the approach to engage with stakeholders, especially NRIs/PIOs and conducting outreach and educational initiatives, review the demand for insurance products in consultation with market participants/NRIs/PIOs as well as scope, nature and scale of global insurance products offered by REs for Indian Corporates/NRIs/PIOs and offering recommendations for development of new products.
The first meeting of the standing committee on insurance was held last week. “They are looking at bringing in improvement to our regulations and exploring ways to expand the retail market. There needs to be a digital channel through which retail insurance products related to life, health and other kinds of products can be sold to retail consumers.These products should also be of international standards,” Rajaraman added.
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