Insurance - IFSC Insurance Offices, Reinsurance and Solvency
What this domain tests
Insurance questions test the IFSCA (Insurance) Regulations, 2021 - how insurers and reinsurers operate from GIFT-IFSC as IFSC Insurance Offices (IIOs), the intermediary registrations, and the prudential standards that apply.
Core rules
- Insurers - life, general, health and reinsurance - operate through an IIO, set up by an Indian insurer or by a foreign insurer as an IFSC branch. The IIO is registered with IFSCA, not IRDAI.
- All business is written in foreign currency; INR-denominated Indian retail policies are not the IIO's business.
- IIOs may accept reinsurance of Indian risks, which is the commercial core of the GIFT-IFSC insurance story, and may insure non-resident and cross-border exposures.
- Prudential requirements mirror Indian practice: prescribed minimum capital/net worth, a solvency margin of 1.5 times the required solvency margin, asset-liability matching, actuarial reporting and annual IFSCA returns.
- Intermediaries - insurance brokers, corporate agents, third-party administrators and surveyors - need separate IFSCA registration.
Worked example
An Indian general insurer wants to cede 20% of a USD 100 million property risk. Placing it with an IFSCA-registered IIO writing reinsurance works: premium and claims flow in USD, the IIO's solvency must stay above 150%, and the cession must still respect IRDAI's reinsurance-placement rules for the ceding insurer. Two regulators touch the deal - IFSCA on the IIO, IRDAI on the Indian cedent - but only one licence is created.
Traps that cost marks
Assuming an IIO needs an IRDAI licence; assuming an IIO is a separate Indian company when it is usually a branch of its parent; forgetting the 1.5x solvency test; assuming Indian retail INR policies can be sold from the IFSC; overlooking the ceding insurer's own regulatory constraints.