JSA Prism | Insurance | August 2026

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New governance structure for insurers and intermediaries

The Insurance Regulatory and Development Authority of India (“IRDAI“) has issued a range of regulatory reforms to implement the amendments to the Insurance Act, 1938 (“Insurance Act”) pursuant to the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (“Insurance Amendment Act”). The Insurance Amendment Act overhauled the legislative framework for the insurance sector which included liberalisation of the sector permitting full foreign ownership for foreign companies.

The IRDAI has issued amendments and new regulations to implement the Insurance Amendment Act. These reforms have been put in place after public consultation on draft regulations issued earlier by the IRDAI in the month of June 2026. The modifications to the regulatory framework are effective immediately and insurers and intermediaries (including new applicants) are required to adhere to these reforms.

Set out below are details of key regulatory changes which will impact new licenses, and operational matters for insurers and intermediaries.

Key amendments to the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024

The amendments to the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024 (“Registration Regulations”) are effective from July 31, 2026. The framework includes amendments to foreign investments, share transfers, and amalgamations of insurance companies.

Promoter eligibility for investment in an insurance company

Foreign promoter

A foreign promoter of an insurer should be incorporated in a Financial Action Task Force (“FATF”) compliant jurisdiction. Therefore, investment in an Indian insurance company from a non-FATF-compliant jurisdiction is not permitted.

Indian promoter

Among the categories of entities that may qualify as an Indian Promoter one such entity is a Core Investment Company (“CIC”). A CIC may qualify as an Indian Promoter if it is registered with the Reserve Bank of India under the Reserve Bank of India (Core Investment Companies) Directions, 2025.

The IRDAI has clarified that a company which is an unregistered CIC can also be an ‘Indian Promoter’. If such unregistered CIC, is a subsidiary, to qualify as an ‘Indian promoter’ it should: (a) be listed on the Indian stock exchange; (b) have its own source of funds; (c) have a net worth of at least INR 500,00,00,000 (Indian Rupees five hundred crore) (approximately USD 52,420,000 (US Dollars fifty-two million four hundred and twenty thousand); and (d) the holding company of the said company must not be a subsidiary of any other company.

Special Purpose Vehicles as promoter

Special Purpose Vehicles (“SPVs”): Previously, only India-incorporated SPVs could promote an Indian insurance company. The Registration Regulations now expand the SPV definition to include entities promoted in any FATF-compliant foreign jurisdiction. This eases the previous position under which a foreign investor had to incorporate the SPV in India and seek additional exchange control approval for investment in the SPV.
Valuation certificate requirement removed: The previous requirement for the SPV’s equity shares to be valued by a Securities and Exchange Board of India registered Category-I merchant banker has been omitted.
Permissible class of insurance business: Insurance companies are granted a registration to undertake either life insurance business, general insurance business, standalone health insurance business or standalone reinsurance business. In line with the Insurance Amendment Act, a provision has been added in the Registration Regulations to permit other classes of insurance business by the Government of India in consultation with the IRDAI in the future. This permits other classes of insurance business without the requirement for amending the Insurance Act.

Other forms of capital

Any entity incorporated, set up, or registered under Indian law or in any FATF-compliant jurisdiction may subscribe to other forms of capital, namely preference share capital and subordinated debt, subject to applicable tax, foreign exchange, anti-money laundering, and counter-terrorism financing laws.

Transfer of shares and approvals

The amendments to the Registration Regulations replace the prior-approval framework for transfer of shares and issue of equity capital of listed and unlisted insurance companies with a revised framework in line with the Insurance Amendment Act. Key features are as follows:

prior approval of the IRDAI is required in the following cases:
- where the transferee’s holding before the transfer is 5% or less, and is likely to exceed 5% after the transfer;
- where the transferee’s holding already exceeds 5% before the transfer and is likely to exceed any of the specified thresholds (i.e., 10%, 25%, 50%, or 75%) after the transfer. For instance, a plain reading of this provision seems to suggest that if a transferee were to increase its shareholding from, 10% to 23%, it will not require prior approval of the IRDAI;
- the transferee is likely to become the single largest shareholder. This provision seems to be applicable irrespective of the threshold for acquisition of the transaction; or
- the amendments clarify that the prior-approval requirement applies to transfers of shares between entities within the same group which exceeds the 5% threshold. This codifies the existing position that internal group restructurings are also subject to prior IRDAI approval requirements;
a new general safeguard is introduced where, even if the acquisition is below 5%, the insurer must refer the matter to IRDAI if it suspects dubious methods have been adopted to avoid the 5% ceiling and camouflage an acquisition of control. IRDAI may then pass such order as it deems fit. Previously, this safeguard applied only to listed insurers; and
the definition of ‘transfer of shares’ includes issuance of equity shares and specifically provides that in case of fresh issuance of equity shares by any insurer, a decrease in the shareholding of any shareholder pursuant to non-subscription on a pro-rata basis will also be treated as shares intended to be transferred.

Amalgamation of insurance and non-insurance business

The amendments enable amalgamation or transfer of non-insurance business with insurance business, subject to the following key conditions:

the transferor entity must be either an insurer or a company holding more than 50% of the paid-up equity capital of the insurer with which it proposes to amalgamate or to transfer its business and such holding company will have no other non-insurance business than holding the insurer;
policyholders’ funds of the transferee insurer cannot be used to meet any liabilities, claims or obligations arising from the amalgamation;
the board of the transferee insurer must satisfy itself that policyholder interests are not adversely affected, and the solvency of the insurer, post amalgamation, must remain above the control level; and
post-amalgamation, the transferee insurer must only conduct insurance business.

The Insurance Amendment Act permitted the non-insurance business of a company to be transferred to, or amalgamated with, the insurance business of an insurer with IRDAI approval. The amendments, however, operationalises this through narrower eligibility conditions, limiting the framework to group restructurings involving non-operative holding companies.

Fees to the IRDAI

The amendment rationalises fees across applications:

Transfer of shares exceeding 50%: For transfer applications exceeding 50% of paid-up equity capital, the processing fee is reduced from INR 50,00,000 (Indian Rupees fifty lakh) (approximately USD 52,899 (US Dollars fifty-two thousand eight hundred and ninety-nine)) to INR 10,00,000 (Indian Rupees ten lakh) (approximately USD 10,580 (US Dollars ten thousand five hundred and eighty)).
Amalgamation fee: For in-principle approval applications for amalgamation, the current premium-linked fee structure (capped at INR 5,00,00,000 (Indian Rupees five crore) approximately USD 529,046 (US Dollars five hundred and twenty-nine thousand and forty-six)) is replaced with a flat fee of INR 10,00,000 (Indian Rupees ten lakh) (approximately USD 10,580 (US Dollars ten thousand five hundred and eighty)) per transacting company. These changes can reduce compliance costs and support ease of doing business.

Amendments to the IRDAI (Insurance Brokers) Regulations, 2018

The IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026 (“Intermediaries Amendment”), which amends, inter alia, the IRDAI (Insurance Brokers) Regulations, 2018 (“Broker Regulations”), are effective from July 30, 2026. The key changes to the Brokers Regulations are set out below.

Perpetual registration

Previously, a certificate of registration (“CoR”) granted to an insurance broker was valid for 3 (three) years and required periodic renewal. In line with the Insurance Amendment Act, the Intermediaries Amendment now provides that a CoR, once granted, will remain in force indefinitely, subject to payment of the non-refundable annual fee, until it is suspended or cancelled by the IRDAI, or surrendered by the insurance broker.

Transition mechanism for existing brokers

The following transition process will now apply for existing insurance brokers to obtain a fresh CoR:

insurance brokers granted CoR prior to the commencement of the Intermediaries Amendment (with a 3 (three) year validity period) must apply to IRDAI for a fresh CoR at any time before January 31, 2027, with the payment of the annual fee;
the fresh CoR will take effect from the date of the grant, and any CoR issued prior to that date will be treated as invalid;
brokers who do not submit the application for a fresh CoR by January 31, 2027, may still apply by March 31, 2027, along with reasons for the delay and an additional fee of INR 750 (Indian Rupees seven hundred and fifty) (approximately USD 8 (US Dollars eight) (plus applicable taxes), and IRDAI may consider such late applications where it is satisfied that undue hardship would be caused otherwise.
Brokers that fail to apply for a fresh CoR by March 31, 2027, will cease to act as an insurance broker from the expiry of the aforementioned period and will need to apply afresh for registration.

Revised fee structure

Fees for new license: The processing fee for new registration remains unchanged, at INR 25,000 (Indian Rupees twenty-five thousand) (approximately USD 260 (US Dollars two hundred and sixty)) for a direct broker, INR 50,000 (Indian Rupees fifty thousand) (approximately USD 520 (US Dollars five hundred and twenty)) for a reinsurance broker, and INR 75,000 (Indian Rupees seventy-five thousand) (approximately USD 780 (US Dollars seven hundred and eighty)) for a composite broker, along with a fee of INR 10,000 (Indian Rupees ten thousand) (approximately USD 104 (US Dollars one hundred and four)) within 15 (fifteen) days of receipt of registration.
Existing brokers: Brokers filing an application for a fresh CoR must submit a fee of INR 10,000 (Indian Rupees ten thousand) (approximately USD 104 (US Dollars one hundred and four)) and annual fee (as set out in (3) below).
Revised annual fee: The revised annual fee is payable before January 31^st of the preceding financial year, set at the higher of INR 10,000 (Indian Rupees ten thousand) (approximately USD 104 (US Dollars one hundred and four)) or 1/25^th of 1% of the broker’s commission and other receipts from insurers/clients in the preceding financial year (rounded off to the next thousand), plus applicable taxes.
Late payment fee: Late payment fee attracts an additional fee of 2% of the annual fee (if paid within 30 (thirty) days of the due date) or 10% (if paid thereafter but before the end of the relevant financial year).

Suspension and cancellation mechanism for fee defaults

A broker’s CoR will now stand automatically suspended, with effect from April 1^st of the relevant financial year, if the annual fee is not paid on time, with IRDAI required to communicate the reasons in writing. The suspension may be revoked if the broker pays the annual fee together with an additional fee equal to 20% of the annual fee within 3 (three) months of suspension. Failing this, the CoR stands cancelled.

Traceability for policies sold through brokers

Brokers must maintain records of every policy solicited through them, including the name and the functional identity of the broker qualified person, point of sales person who sold it, based on a unique identity issued by the Central Government, with such records to be accessible to IRDAI remotely:

the proposal form, policy and certificate of insurance must record the relevant salesperson’s name, functional identity, mobile number and email address;
where a policy is sold through the broker’s digital platform without any salesperson involvement, the Principal Officer’s telephone number and email address must be disclosed instead; and
these tagging requirements take effect from January 1, 2027.

Increased disclosure obligations

Brokers with majority foreign shareholding, or with commission income exceeding INR 10,00,00,000 (Indian Rupees ten crore) (approximately USD 1040,000 (US Dollars one million forty thousand) in a financial year, must now disclose to IRDAI on an annual basis, and publish on their website, details of commission earned, related party transactions, and profits and dividends declared and paid, in the form and manner specified by IRDAI.

Majority foreign shareholding

Insurance Brokers with majority foreign shareholding are no longer required to appoint the majority of directors and key management persons as resident Indian citizens. However, the chairman of the board of directors or the chief executive officer, principal officer, or managing director (as applicable) must be a resident Indian citizen. Additionally, the broker must bring in the latest technological, managerial and other skills.

Amendments to the IRDAI (Registration of Corporate Agents) Regulations, 2015

The Intermediaries Amendment also amends the IRDAI (Registration of Corporate Agents) Regulations, 2015 (“Corporate Agents Regulations”). Several amendments to the Corporate Agents Regulations mirror those made to the Broker Regulations, including perpetual registration, transition mechanisms for existing registrations, annual fee structures, automatic suspension for non-payment of annual fees, traceability and tagging requirements, disclosure obligations, and residency requirements for intermediaries with majority foreign shareholding.

In addition to the above, set out below are key changes applicable to corporate agents.

Revised fee structure

Corporate agents pay a flat application fee of INR 10,000 (Indian Rupees ten thousand) (approximately USD 104 (US Dollars one hundred and four)) (non-refundable) plus applicable taxes at the time of application. The annual fee structure, late payment penalties, and fee default consequences mirror those applicable to insurance brokers.

Branch-level staffing requirement

No insurance solicitation may be carried out from a branch office unless a specified person, assigned exclusively to that branch, has been appointed, and each branch office must employ an adequate number of specified persons commensurate with the volume of its business, including the number of members enrolled under group policies.

Principal business other than insurance intermediation

Corporate agents whose principal business is other than insurance intermediation must include a schedule to their financial statements disclosing revenues received for insurance intermediation and other income/receipts from insurers, with audited financial statements submitted to the IRDAI before September 30^th each year.

Amendments to the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024

The amendments to the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 (“AFI Regulations”) are effective from July 31, 2026. The amendments introduce various changes to the actuarial, finance, and investment functions for insurance companies and foreign reinsurance branches (“FRB”). The key amendments are set out below.

Appointed actuary and certifying actuary

The amendments require an Indian re-insurer to appoint an ‘Appointed Actuary’ for life reinsurance and general reinsurance business separately with the prior approval of the IRDAI. Similarly, an FRB is required to appoint a ‘Certifying Actuary’ for life reinsurance and general reinsurance business separately and notify the IRDAI of such appointment within 7 (seven) days.

The amendments set out revised eligibility criteria, detailed powers and functions for the ‘Certifying Actuary’ of an FRB.

Actuary for specific purposes

The reforms introduce a new category of ‘Actuary for Specific Purposes’ for matters relating to, inter alia:

certification of soundness of terms of life insurance business required by the IRDAI when considering registration or at any other time, if rates, advantages, terms or conditions appear to not be workable or sound;
investigation and valuation of life insurance business ordered by the IRDAI where the valuation basis appears faulty; and
investigation and valuation of life insurance business ordered by the IRDAI in context of expense of management violations.

Determination of valuation surplus for insurers and reinsurers

The amendments introduce a new requirement for determination and reporting of ‘Valuation Surplus’ by general insurers, standalone health insurers, Indian re-insurers, and FRBs. In this context, the appointed actuary of a general insurer or standalone health insurer must determine the actuarial surplus arising out of valuation of assets and liabilities. Similarly, the appointed actuary of an Indian re-insurer and certifying actuary of an FRB must determine and report the actuarial surplus arising out of a valuation of assets and liabilities made for a financial year.

New investment avenues for insurers

The amendments introduce new investment avenues for insurers, including, inter alia, as follows:

Private limited companies: Life insurers may invest up to 3% of the life fund or segregated fund, and general insurers up to 5% of investment assets, in equity or debt instruments of private limited companies, alternative investment Funds, and venture funds (all taken together), subject to fulfilment of the following conditions:
- the relevant exposure and prudential norms specified under the AFI Regulations are to be complied with;
- the investee company must have a net worth of minimum INR 25,00,00,000 (Indian Rupees twenty-five crore) (approximately USD 2,600,000 (US Dollars two million six hundred thousand) and reported net profit for at least 2 (two) years out of the 3 (three) preceding years; and
- no investments must be made in private limited companies belonging to the promoters’ group of the insurer.
Promoter group exposure (new single-company limit): The AFI Regulations previously imposed only an aggregate limit of 5% of investment assets for investments in all companies belonging to the promoters’ group. The amendments introduce a new single-company limit. An insurer may invest not more than 5% of its investment assets in any company or body corporate owned or controlled by the promoters, in addition to the existing 5% aggregate limit.

Filing of returns and signing requirements

The AFI Amendment prescribes new requirements pertaining to the filing of statutory returns and the execution of signing formalities by insurers and reinsurers.

IRDAI (Manner and Procedure for Imposition of Penalties) Regulations, 2026

The IRDAI (Manner and Procedure for Imposition of Penalties) Regulations, 2026 (“Penalties Regulations”), establish an enforcement framework for the imposition of penalties under the Insurance Act and the Insurance Regulatory and Development Authority Act, 1999. Key features include:

Adjudication process: The Penalties Regulations prescribe an adjudication process comprising initiation of proceedings, issuance of show-cause notice specifying the alleged default, applicable provisions, evidence, and penalty provisions; submission of reply and grant of personal hearing; and issuance of a reasoned order recording findings, provisions contravened, and penalty imposed.
Factors for quantum: In determining the quantum of penalty, the IRDAI must have regard to the factors specified in the Insurance Act, including: (a) the nature, gravity and duration of the default; (b) the repetitive nature of the default; (c) the disproportionate gain or unfair advantage obtained; (d) the loss caused to the policyholders; (e) the action taken to mitigate the effects and the timeliness thereof; (f) the number of policyholders impacted; (g) whether the penalty is proportionate and acts as a deterrent; and (h) such other factors as may be deemed appropriate.
Payment and crediting of penalties: The penalty imposed must be paid within 45 (forty-five) days in the manner specified in the order. Under the Insurance Act, penalties for defaults can range up to INR 1,00,000 (Indian Rupees one lakh) (approximately USD 1,040 (US Dollars one thousand and forty)) per day, subject to a maximum of INR 10,00,00,000 (Indian Rupees ten crore) (approximately USD 10,400,000 (US Dollars ten million four hundred thousand) for general non-compliance. All sums realised by way of penalties under the Insurance Act or the Insurance Regulatory and Development Authority Act, 1999 must be credited to the Policyholders’ Education and Protection Fund.

Conclusion

The regulatory developments represent a significant step in IRDAI’s effort to modernise the insurance sector following the Insurance Amendment Act. These amendments signal IRDAI’s continued focus on regulatory modernisation, policyholder protection, and ease of doing business. Insurers, intermediaries, and other stakeholders must assess the impact of these changes on their operations and ensure timely compliance with the transition requirements.

This Prism has been prepared by: