MoU between India and USA in insurance regulatory sector

MoU between India and USA in insurance regulatory sector

Question: MoU between India and USA has been approved by which of the following regulatory bodies?
(a)IRDA & FIO
(b)IRDA & FAO
 (c) IRDA & FAI
(d)IRDA & FIA
Answer: (a)
Related facts:

  • On 29 August, 2018, Union Cabinet has approved a Memorandum of Understanding (MoU) between Insurance Regulatory and Development Authority of India (IRDAI) and the Federal Insurance Office, USA.

Impact:

  • The MoU provides a framework for cooperation and coordination on various regulatory functions.
  • India and USA have also consented on facilitating cooperation on international standard-setting activities, financial stability and the development and implementation of consumer protection through sound prudential regulation of the insurance sector.

About IRDA & FIO:

  • IRDAI is a body set up under the Insurance Regulatory and Development Authority Act, 1999 to regulate, promote and ensure orderly growth of the insurance and re-insurance business in India.
  • Similarly, in USA, Federal Insurance Office (FIO) is provided with the authority to monitor all aspects of the insurance sector and to represent the USA on prudential aspects of international insurance.

Why Important?

  • USA is the leading contributor of foreign direct investment in India and many insurance companies have set up joint venture with USA based insurance companies.
  • With increase in foreign investment cap to 49%, there is significant scope for foreign investments in Indian insurance sector particularly from USA based companies.

References-
http://www.pib.nic.in/PressReleseDetail.aspx?PRID=1544247

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