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CS Professional · IFSCA - Regulations, Listing and Compliances · Insurance and Reinsurance

Vishwa Re, a reinsurer in GIFT IFSC, receives a proposal from Rao Textiles Ltd., a Mumbai-based company, to insure its factory in Gujarat directly through Vishwa Re's IFSC office as a cost-saving measure. Which view is most consistent with the IFSC insurance framework?

Direct cover of an Indian domestic factory through an IFSC reinsurer is not freely allowed. IFSC insurance offices mainly serve offshore and IFSC clients and limited permitted Indian business, so the proposal must be checked against the permitted activities rather than assumed allowed.

  1. APermitted freely because the IFSC is outside India for all purposes
  2. BPermitted only if the premium is paid in rupees
  3. CNot straightforward, because IFSC insurance offices serve mainly offshore and IFSC clients and permitted Indian business is limited by the rules, so a domestic resident's direct cover for an Indian risk needs checking against the permitted activitiesCorrect
  4. DPermitted because every IFSC insurer can underwrite any Indian risk

Explanation

The IFSC is treated as a non-resident jurisdiction for foreign exchange purposes, but it is not freely open for Indian domestic direct insurance. IFSC insurers largely serve offshore risks, IFSC units and permitted Indian business such as reinsurance and cover for IFSC entities. Rao Textiles' domestic factory cover must be tested against permissions. Option 1 wrongly generalises the foreign exchange treatment.

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