Premiums received in connection with insurance and reinsurance activities are subject to applicable taxes, including goods and services tax. Income tax laws provide the policyholder with deductions on life and health insurance premiums paid. If a representative of a company has a principal activity other than insurance distribution, it is not permissible to make the sale of its products dependent on the sale of an insurance product or vice versa. To date, company representatives have been limited to working for a maximum of one life insurer and one non-life insurer; However, following the announcement of the 2015 Registration of Corporate Agents (IRDAI) regulation, they will be allowed to adopt an open architecture under which they will be able to operate for up to three life insurers, three general insurers and three health insurers. The Indian legislature enacted the Commercial Courts Act 2015 (Commercial Courts Act) in 2015 for the expeditious resolution of commercial disputes. Under the Commercial Courts Act, special commercial courts have been established for the exclusive settlement of commercial disputes. The Commercial Courts Act defines a commercial dispute as an insurance and reinsurance dispute worth approximately Rs 300,000. Recent amendments to the Commercial Courts Act have proposed mandatory mediation for parties before bringing a commercial action. The mediation authority has not yet been designated. Policyholders have the legal right to bring an action in the Indian courts for redress under an insurance policy and Indian law applies. This right cannot be shortened by the terms of the insurance policy or otherwise.
Residents of India may take out life insurance policies issued by an insurer outside India, provided that the policy is held under express or general approval from the Reserve Bank of India. Indian residents are prohibited from taking out insurance for real estate in India or ships, ships or aircraft registered in India with an insurer outside India without the approval of IRDAI. However, residents of India may purchase health insurance from an insurer outside India, provided that the total transfer, including the premium amount, does not exceed the limits imposed by the Reserve Bank of India under the liberalized remittance program. IRDA opened the market in August 2000 with a call for registrations. Foreign companies were allowed to own up to 26%. The Authority has the power to legislate under section 114A of the Insurance Act 1938 and has issued various regulations from 2000, ranging from the registration of undertakings for the purpose of carrying on the business of insurance to the protection of the interests of policyholders. Regulatory limits on the commission or remuneration payable to insurance agents and insurance intermediaries for the solicitation and acquisition of insurance business will remain in place under the Payment of Commissions or Remuneration or Rewards to Insurance Agents and Intermediaries Regulations, 2016 (Commission Regulations) (Commission Regulations), as amended. However, insurers are allowed to make further payments in the form of rewards to insurance agents or insurance intermediaries.
Similarly, the very ascending hierarchy of civil courts includes about 600 district courts, 25 high courts and the Supreme Court, which hears only appeals and cases from lower courts concerning human rights violations. Four of the 25 high courts (Delhi, Bombay, Madras and Calcutta) originally have jurisdiction over civil matters relating to a certain monetary value. The district courts subordinate to them do not rule on matters concerning values above this limit. The other district courts have unlimited financial jurisdiction and are the courts of first instance for all insurance disputes within their territorial jurisdiction. Over the past two years, due to the Covid-19 pandemic, the volume of M&A activity in the insurance sector, as well as the listing of insurance companies in India, has declined. However, press reports suggest that the Indian government wants to privatize a public sector insurance company and also proceed with an IPO for the Life Insurance Corporation of India. As the Indian economy slowly recovers and the foreign investment cap for insurers is relaxed from 49% to 74%, and 100% of foreign investment is allowed for insurance intermediaries, this is expected to lead to an increase in foreign direct investment in the insurance sector. Despite the ongoing Covid-19 pandemic and months-long lockdown and curfew, 2021 has been a fairly active year for India`s insurance industry. In March 2020, IRDAI issued various instructions to deal with the problems arising from the pandemic, relating, among other things, to the processing of Covid-19 claims, the extension of grace periods for premium payments, the relaxation of regulatory deadlines and the timely service of insurance policies.