JSA Newsletter | Insurance | April to June 2026 Edition

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This edition of the Newsletter captures the key regulatory developments in the Indian insurance sector between April – June 2026. The quarter shows a clear movement from policy formulation to implementation readiness, particularly through the transition to Indian Accounting Standards (“Ind AS”), continuing efforts towards formulation of risk-based capital framework, and greater attention to affordability, trust, and policyholder protection. Further, the Insurance Regulatory and Development Authority of India (“IRDAI/Authority”), intends to deepen insurance penetration, improve sectoral resilience, enhance regulatory supervision, and build greater confidence among policyholders, investors, and market participants.

In furtherance of the above objectives, various measures were taken in the second quarter of 2026 focused on strengthening customer trust, improving transparency and reinforcing accountability across the insurance sector. In this regard, the following groups/committees were constituted:

• joint expert group on Ind AS comprising representatives from IRDAI, Institute of Chartered Accountants of India (“ICAI”), Institute of Actuaries of India (“IAI”), Securities and Exchange Board of India (“SEBI”) and National Financial Reporting Authority (“NFRA”) to support the implementation of Ind AS by addressing transition issues, recommend scope and approach for independent validation processes, clarify audit requirements, define the role of appointed actuaries in preparation of Ind AS financial statements, and suggest improvements to financial statement formats and disclosures[1]. The joint expert group would remain in force for a period of 2 (two) years;
• sub-committee on health insurance under the Insurance Advisory Committee (“IAC”) to review the landscape of private health insurance, including reviewing of coverage, penetration, claims experience, product design, grievance redressal and consumer experience, examining the pricing of products and fairness and barriers to affordability, examining role of fraud control, digital systems, and healthcare provider networks, improving efficiencies, recommending measures to promote innovation and better risk pooling and reviewing the interaction between private and public health insurance schemes. The sub-committee would have a tenure of 1 (one) year and would prepare its first report with action items within 4 (four) months of its establishment[2]; and
• working group on Artificial Intelligence (“AI”) governance, to guide Regulated Entities (“REs“) in the insurance sector on the adoption, governance, and oversight of AI technologies including examining impact of AI on the sector, assessing AI adoption and maturity, AI-related risks and consequential compliance requirements for entities in the insurance sector, reviewing global regulatory approaches, developing AI governance and audit frameworks, strengthening security and resilience against AI-related risks, and recommending measures for ethical, transparent and explainable use of AI tools in the insurance sector. The working group would submit its recommendations to the Member (Finance and Investment), IRDAI, within 3 (three) months from the date of constitution.[3]

Further, IRDAI, vide circular dated May 13, 2026, issued the minutes of the 133^rd Authority meeting held on December 23, 2025. The meeting recorded industry performance, premium growth, claims trends, affordability initiatives, and regulatory reform priorities. The Authority discussed the need for periodic sectoral review, risk-based capital framework implementation, Ind AS implementation, and possible governance reforms based on conflict-of-interest and disclosure standards.

Thereafter, IRDAI, vide circular dated May 15, 2026, issued the minutes of the 134^th Authority meeting held on March 9, 2026, highlighting the improved premium growth in life, general and health insurance, and noting the impact of Goods and Services Tax exemption on accelerating health insurance growth. The Authority approved in-principle drafting and publication of regulations for stakeholder consultation under the Sabka Bima Sabki Raksha framework and approved nomination of the proposed 18 (eighteen) members to IAC.

Further, through a press release dated May 21, 2026, IRDAI announced an orientation programme for insurance ombudsmen. The program aimed to strengthen consistency in grievance redressal, improve institutional capacity, and address emerging issues in the insurance sector. The discussions emphasised the importance of approaching grievances with empathy, adoption of digital tools, timely complaint resolution, enhancing public awareness regarding the grievance redressal system, and the need to increase the number of hearings conducted through video conferencing.

Additionally, IRDAI along with ICAI and IAI conducted a workshop on implementation of Ind AS for the insurance sector[4]. The workshop brought together chief financial officers and appointed actuaries from insurance companies, following the notification of the IRDAI (Actuarial, Finance and Investment Functions of Insurers) (Amendment) Regulations, 2026, which mandate the preparation and presentation of insurers’ financial statements in accordance with applicable Ind AS from April 1, 2026. The sessions focused on the regulatory framework, accounting and auditing implications, actuarial dimensions, valuation methodologies, and collaboration between finance and actuarial functions. The new accounting framework was noted to enhance transparency, strengthen governance standards and enable more efficient utilisation of capital and improve stakeholders’ confidence. The workshop also highlighted the role of the joint expert group as a platform for seeking guidance and resolving implementation-related issues during the transition process.

These new regulations/amendments/guidelines aim to drive sustainable growth, improve efficiency in operations and uphold policyholder protection in the dynamic insurance landscape and are discussed further in this newsletter.

Clarifications on implementation of Ind AS

To ensure uniformity in implementation of Ind AS by insurers across the industry, IRDAI, vide circular dated April 1, 2026, has issued clarifications regarding certain operational, accounting and regulatory aspects arising during implementation. The key clarifications are as follows:

• financial statements and financial information prepared under Ind AS must be in accordance with the formats provided in Schedule II and Schedule – IIA of the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 (“Investment Regulations”), respectively. Insurers must undertake parallel reporting of financial statements and financial information for a period of 2 (two) years from the date of implementation, or for such period as may be specified by the competent authority;
• both financial statements and financial information are to be prepared and submitted on a quarterly basis in the specified formats and are to be disclosed on the insurer’s website;
• insurers seeking 1 (one) year forbearance for preparation of Ind AS financial statements under the Investment Regulations must submit an application to IRDAI on or before April 30, 2026, along with a board approved action plan. The application must include a detailed implementation roadmap specifying monthly milestones, timelines for system and data readiness, status of preparedness of actuarial and finance functions, and the governance framework for overseeing the transition. Such insurers must also comply with quarterly financial reporting requirements in the manner specified;
• segregation of policyholder and shareholder funds will continue to be maintained in accordance with Section 11 of the Insurance Act, 1938 and Master Circular on Actuarial, Finance and Investment Functions of Insurers, 2024;
• the actuarial investigation, submission of the actuary report, determination and distribution of surplus, valuation of assets and liabilities for solvency purposes, and maintenance of solvency margin will continue to be governed by the respective provisions of the Insurance Act, 1938 and Schedule–I (dealing with the rules for the actuarial function in India’s insurance sector) of the Investment Regulations and the Master Circular on Actuarial, Finance and Investment Functions of Insurers, 2024. Insurers are to ensure that the adoption of Ind AS does not, by itself, alter the basis of actuarial investigation, surplus determination, or solvency assessment as per the relevant provisions of the Insurance Act, 1938; and
• discounting of insurance contract liabilities is to be carried out in accordance with Ind AS 117 (dealing with insurance contracts), and the risk-free rate for such discounting is to be derived from the term structure of interest rates based on Government of India securities, using the zero-coupon yield curve published by the Clearing Corporation of India Limited, or any other source as may be specified.

Further, SEBI in its Master Circular no. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated July 11, 2023 had prescribed the formats for publishing financial results by listed companies and had mandated listed insurers to follow the formats as prescribed by IRDAI. IRDAI, vide circular dated July 8, 2026, has prescribed updated formats for publication of audited and unaudited quarterly financial results by listed insurers which are required to prepare their financial statements as per Ind AS, while listed insurers who have been granted forbearance for FY 2026-27 for Ind AS implementation may continue publishing financial results as per existing IRDAI circulars.

Compliance with guidelines on prevention and regulation of dark patterns

IRDAI, vide a press release dated April 2, 2026, has highlighted the need for REs offering insurance products on e-platforms to comply with the Guidelines on Prevention and Regulation of Dark Patterns issued by the Central Consumer Protection Authority on November 30, 2023. The move is in line with a broader regulatory push across the financial sector to curb deceptive digital practices. IRDAI advised the concerned REs to carry out a self-assessment on the status of compliance and submit a report within 15 (fifteen) days. Wherever non-compliance is found, an action plan with timelines for removing the dark patterns is required to be submitted within 1 (one) month.

IRDAI Information and Cyber Security Guidelines, 2026

In view of the evolving threat landscape, the feedback received from the industry and to enable the insurance industry to further strengthen their defenses as well as related governance mechanism to deal with emerging cyber threats, IRDAI, vide circular dated April 6, 2026, has issued the revised cyber security guidelines. All Insurers, Foreign Re-insurers Branch, Insurance Intermediaries and the Insurance Information Bureau of India are required to strictly adhere to the said guidelines and ensure compliance from the current financial year.

These guidelines set out the minimum standards and governance mechanisms to be adopted by all REs. The revised guidelines inter alia further stipulate the following:

• the Information Security Risk Management Committee (“ISRMC”) must meet, at minimum, on a quarterly basis. The ISRMC must report the status of the non-conformities in the annual cyber security assurance audit report to the Risk Management Committee, which in turn will take serious non-conformities to the board;
• the REs must take appropriate technical and organisational measures to comply with the provisions of Digital Personal Data Protection Act, 2023 and the rules thereunder;
• additional roles and responsibilities of the board of directors have been prescribed, including providing sufficient and risk proportionate budget for information and cyber security keeping in view emerging threats, receiving the status of non-conformities observed in the annual cyber security assurances audit report and risk report, approving timelines for closure of gaps and ensuring gaps are closed within 12 (twelve) months of reporting;
• enhanced responsibilities of Chief Technology Officer (“CTO”) and Chief Information Security Officer (“CISO”). These include stipulations as follows: (a) the CISO must not have a direct reporting relationship with the head of the Information Technology (“IT”) function and must not be given any business targets; (b) CISO must be a permanent invitee to the IT steering committee; (c) CTO must enable and support implementation of the security related technology and process within the organisation, and must ensure that the IT processes are in line with information security standards defined by CISO;
• the organisation must establish an IT steering committee with representation at senior management level from IT and business functions. The requirement of the Control Management Committee has been done away with, and its functions must be included in the terms of reference of the Risk Management Committee; and
• the Risk Management Committee must have one or more independent external experts (IEE) with substantial IT and/ or cybersecurity expertise in managing or guiding IT/ cybersecurity related initiatives or projects.

Obligatory cession for the financial year 2026-27

IRDAI, vide notification dated April 13, 2026 read with clarificatory notification dated June 18, 2026, has issued the “Obligatory Cession for financial year 2026-2027” in accordance with Section 101A of the Insurance Act, 1938. The notification stipulates that the percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian re-insurer(s) will be 4% in respect of insurance attaching during the financial year commencing April 1, 2026 and ending March 31, 2027, except Bharat maritime insurance premium, terrorism premium and premium ceded to nuclear pool wherein it would be made ‘Nil’. The entire obligatory cession is required to be placed only with the General Insurance Corporation of India. The notification outlines various terms and conditions, including the following:

• there would be no limit on the sum insured applicable for the cessions made during the period from April 1, 2026 to March 31, 2027. The Indian re-insurer may require the ceding insurer to give immediate notice of underwriting information of any cession exceeding an amount as specified by the former. The ceding insurer will inform the Indian re-insurer at all times whenever the cession exceeds such specified limits;
• minimum percentages of commission on obligatory cession for different classes of business; and
• Indian re-insurer must share the profit commission, on a 50:50 basis, with the ceding insurer based on the performance and surplus of the total obligatory portfolio of the ceding insurer, after factoring the incurred loss % (to be worked at the end of 3 (three) financial years), management expenses at 2%, profit at 5% and commission at 12.5%.

Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026

Pursuant to Press Note 1 (2026), the Ministry of Finance (“MoF”), vide notification no. S.O. 2186(E) dated May 2, 2026, has amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”). Some of the key amendments are as follows:

• serial number F.8 of Schedule I to the NDI Rules (dealing with foreign investment in the insurance sector) has been revised. In line with Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, the amendment permits up to 100% investment by foreign investors (including portfolio investors) under the automatic route in the paid-up equity capital of Indian insurance companies, subject to approval and verification by IRDAI;
• the sectoral conditions applicable to an Indian insurance company with foreign investment have been aligned with the revised Indian Insurance Companies (Foreign Investment) Rules, 2015 (“FI Rules”) which require Indian insurance companies to have at least 1 (one) among the chairperson of the board, managing director or chief executive officer to be resident Indian citizens. Accordingly, the sectoral condition regarding a majority of directors and key managerial personnel being resident Indian citizens has been omitted. Notably, recent amendments to the FI Rules have also further simplified the foreign investment regime by omitting certain other conditionalities applicable to Indian insurance companies with foreign investment in excess of 49% (i.e., stipulations concerning independent director requirements and requirement to transfer profits to general reserves in case of dividend payouts in certain situations); and
• further, in line with recent amendments to the FI Rules, certain sectoral conditions applicable to an insurance intermediary (with majority foreign shareholding) relating to obtaining prior IRDAI permission for repatriating dividends and stipulations governing payments to foreign promoters or their associated entities and composition of board of directors and Key Management Persons (“KMPs”), have been omitted.

Accountability of KMPs of insurance companies enhanced

IRDAI has enhanced governance standards in insurance companies to enable an ecosystem which is customer-centric and endeavors to provide transparency to the policyholder. In this regard, amendments have been introduced which enhance the accountability of KMPs of insurance companies and links performance of the companies to their remuneration. However, such additional measures do not apply to KMPs deputed by foreign promoters to Indian insurers.

For a detailed analysis, please refer to the JSA Prism of June 1, 2026.

Enforcement of Jan Vishwas (Amendment of Provisions) Act, 2026 for financial sector laws

MoF, vide notification dated June 22, 2026, has notified June 23, 2026, as the date on which specified provisions of the Jan Vishwas (Amendment of Provisions) Act, 2026 (“JV Act”) will come into force in relation to the following enactments:

• the provisions of the Reserve Bank of India Act, 1934 (Serial No. 7 of the Schedule to the JV Act);
• the provisions of the Life Insurance Corporation Act, 1956 (Serial No. 20 of the Schedule);
• the provisions of the General Insurance Business (Nationalisation) Act, 1972 (Serial No. 38 of the Schedule); and
• the provisions of the Pension Fund Regulatory and Development Authority Act, 2013 (Serial No. 68 of the Schedule).

The above amendments primarily relate to offences and penalties under the relevant statute, including revisions to the quantum and nature of penalties.

This Newsletter has been prepared by:

Venkatesh Raman Prasad Partner

Ronak Ajmera Partner

Udit Rao Senior Associate

Archita Tiwari Associate

For more details, please contact km@jsalaw.com.

[1] IRDAI order dated April 1, 2026

[2] IRDAI order dated April 2, 2026

[3] IRDAI order dated June 17, 2026

[4] IRDAI press release dated June 5, 2026