IFSCA Proposes Dedicated Regulatory Framework for Mutual Insurers and Protection & Indemnity Clubs Operating from IFSC

Overview of the Regulatory Initiative

The International Financial Services Centres Authority (IFSCA) has released a consultation paper outlining the proposed IFSCA (Registration and Operations of Mutual Insurer and Protection & Indemnity Club) Regulations, 2026. This regulatory initiative seeks to establish a purpose-built legal architecture for three categories of insurance entities operating within the International Financial Services Centre (IFSC): Mutual IFSC Insurance Offices (MIIOs), Mutual Protection & Indemnity Clubs (MPICs), and Non-Mutual Protection & Indemnity entities (NMPIs).

The initiative reflects IFSCA's broader objective of deepening the insurance ecosystem within the IFSC and aligning it with internationally recognised best practices in mutual insurance and marine liability underwriting. Stakeholders and members of the public are invited to submit their comments by 12th July 2026.

Legislative Basis and Regulatory Authority

The draft regulations have been framed in exercise of powers conferred under sub-section (1) of Section 28 read with Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019, and clause (zd) of sub-section (1) of Section 114A read with Section 118A of the Insurance Act, 1938.

The regulations, once notified, shall come into force from the date of publication in the Official Gazette.

Objectives of the Proposed Regulations

The core regulatory purpose is to introduce a structured, transparent, and accountable framework that:

  • Enables member-owned insurance structures to operate formally from the IFSC
  • Attracts foreign mutual insurers, mutual reinsurers, and P&I Clubs to establish offices in India's IFSC
  • Ensures protection of member and policyholder interests through robust governance standards
  • Facilitates the orderly growth of mutual insurance and marine protection and indemnity business from the IFSC
  • Aligns the IFSC with global maritime insurance conventions and international regulatory norms

Chapter I: Key Definitions Under the Draft Regulations

The draft regulations introduce a comprehensive definitional framework. Key terms include:

Mutual Insurance

Mutual Insurance is defined as a risk-sharing arrangement wherein members of an association mutually agree to indemnify each other against liabilities. Financial requirements are met through advance and supplementary calls levied upon members proportionate to their respective risks, and the structure operates on a non-profit basis.

Mutual IFSC Insurance Office (MIIO)

An MIIO is a financial institution registered with the Authority to undertake permissible insurance activities under these regulations, operating under clause (c) of sub-section (1) of Section 3 of the International Financial Services Centres Authority Act, 2019.

Protection & Indemnity Club (MPIC)

An MPIC is a mutual insurance association formed by shipowners, operators, or charterers to pool their maritime liabilities to third parties. It provides insurance cover for liabilities arising from ship operations.

Non-Mutual P&I Club (NMPI)

An NMPI is a fixed-premium insurer offering cover for maritime third-party liabilities on a predetermined basis, where the insurer bears no obligation toward supplementary calls and derives no share in any mutual surplus.

Net Owned Fund (NOF)

NOF is computed as paid-up equity capital plus free reserves and securities premium, reduced by accumulated losses and the book value of intangible assets. It must be calculated based on the last audited Balance Sheet. Capital raised after the Balance Sheet date is not to be included in the NOF computation.

Fixed Premium Basis

This refers to underwriting of marine P&I risks where the insurer's liability is capped at a predetermined amount agreed at policy inception, with no exposure to supplementary calls and no entitlement to mutual surplus.

Chapter II: Eligibility Framework

Part A — Mutual IFSC Insurance Office (MIIO)

For an applicant to qualify for MIIO registration, it must operate on the following foundational principles:

  • Member-owned structure with exclusive policyholder membership rights and the right to elect management
  • Sole purpose of conducting insurance business with and for its members
  • Return of excess premiums to members after covering losses and expenses
  • Common equitable ownership of assets by all members
  • Variable contribution system — the board may issue supplementary calls when actual claims exceed initial collections

Explanation: The quantum of a call payable by a member shall be determined per the MIIO's constitution or bye-laws and may be proportionate to the insured risk, linked to premium size, or subject to any liability cap specified in the bye-laws.

For foreign mutual insurers seeking to establish a branch in the IFSC, the following additional requirements apply:

  1. Valid registration or licence from the home country regulatory authority
  2. No-objection certificate from the home country regulator for IFSC branch establishment
  3. Registration in a jurisdiction with which India has a Double Taxation Avoidance Agreement
  4. Compliance with Net Owned Fund requirements under sub-section (3) of section 6 of the Insurance Act, 1938 (for reinsurance business)
  5. Board undertaking to comply with assigned capital, solvency, and other regulatory requirements
  6. Satisfactory regulatory compliance track record in the home country and other jurisdictions
  7. Minimum credit rating demonstrating good financial security characteristics from an internationally recognised rating agency for the preceding three years
  8. Submission of all requisite information as may be required by the Authority

Insurance co-operative societies desirous of setting up an MIIO must be registered under the Co-operative Societies Act, 1912 (2 of 1912), or any applicable State co-operative law, or the Multi-State Cooperative Societies Act, 1984 (51 of 1984).

Bodies corporate incorporated outside India must establish their IFSC presence under the Companies Act, 2013 and must be incorporated in a jurisdiction with which India has signed a Double Taxation Avoidance Agreement.