The Insurance Regulatory and Development Authority of India has come up with new rules to impose a reliable settlement system on insurers.

IRDA, India's insurance regulator, has noticed that the inter-company balances in reinsurance and co-insurance business are very high and rising. A lack of co-operation between the companies, coupled with inadequate documents, is scotching efforts to minimise these balances.

All non-life insurers, reinsurers, branches of foreign reinsurers, IFSC [Indian Financial System Code] insurance offices, brokers, reinsurance brokers registered/licensed by IRDA shall therefore be forced to participate in the Electronic Transaction Administration and Settlement System when conducting reinsurance and coinsurance business both inward and outward. All insurers or reinsurers or brokers or reinsurance brokers registered outside India and dealing with entities registered with or licensed by the authority for conduct of inward/outward reinsurance shall also be required to mandatorily participate in the ETASS system as its members.

The relevant guidelines were issued recently but will only come into force in a month's time or later, when an administrator, in consultation with the regulator, frames new business rules for the orderly conduct of the transactions. The regulator is empowered to authorise this by s14 IRDA Act 1999.

IRDA is also thought to be making it harder for insurers to register for business. Business Insurance writes that it has drafted up some regulations that ask for the details of promoters' voting rights, financial performance projections, products to be sold and the areas in which the insurers intend to operate.