ABC Ltd. is planning to enter into the business of Insurance for which Board of Directors of the Company seeks your advice about the norms in respect of paid up equity capital for carrying out the business of an insurer.

In order to advice ABC Ltd. about the norms in respect of paid up equity capital for carrying out the business of an insurer, one must understand the requirement of Paid Up Equity Capital for carrying out the business of an insurer. Accordingly, the requirement of Paid Up equity capital for insurance business are as below: No person can carry on Insurance business unless & until he has obtained a certificate from the Insurance Development Regulatory Authority (IRDA) for a particular class of Insurance business. For e.g. A person can start life Insurance, marine Insurance, fire Insurance, health Insurance etc. But a life Insurance business cannot be combined with other type of Insurance business. Every such application shall be made in the form IRDA/R1 for registration. Every Insurance company shall deposit in cash or in approved securities or partially in cash or partially in approved securities as per details given below: - In case of Life Insurance business, a sum equivalent to 1% of his total gross premium written in India in any financial year commencing after the 31st day of March 2000 not exceeding rupees ten crores (₹10 crores). In the case of General Insurance business a sum equivalent to 3% of his total gross premium written in India in any financial year commencing after 31/3/2000 not exceeding rupees ten crores (₹10 crores). In case of reinsurance business, a sum of rupees twenty crores (₹20 crores). If the business is to be done in marine Insurance only & relates exclusively to country craft or its cargo or both the amount to be deposited ₹1,00,000/- (₹1 lakh) only. A certificate from the Reserve Bank of India showing the amount deposited. A declaration verified by an affidavit from the "Principal Officer" that the equity capital of the company has been complied with. The paid up equity excluding preliminary expenses and registration charges should be ₹100 crores for life or General Insurance business and ₹200 crores for the Reinsurance business. If any insurer is carrying on business of insurance already then within 6 months from the commencement of the Act the paid up capital should be as per prescribed limits in the Act. A certified copy of the published prospects and of the standard policy forms of the insurer. Statement of assured rate, advantages, terms & conditions to be offered in connection with Insurance policies. In the case of the business the certificate from the actuary that such rates are workable & sound. In the case of marine accident & miscellaneous Insurance business other than workmen's compensation & motor car Insurance the available forms, prospects and statements to be submitted. The receipt of deposit of ₹50,000/- for each class of business. If there is any foreign partner, a certified copy of Memorandum of understanding between Indian promoter and foreign promoter including details of support comfort letters exchanged between the parties.