The Insurance Regulatory and Development Authority of India has submitted its proposals for the "Expenses of Management of Insurers Transacting the Business of Life Insurance Regulations 2015" for comment.

Sections 40B and 40C Insurance Laws (Amendment) Act 2015 have abolished rules 17D and 17F and empowered IRDA to frame regulations governing the expenses of management for life insurance firms. IRDA has drafted up some regulations and submitted them for public scrutiny. These proposals state the following.

• 'Expenses of management' (evidently a legal term) should include remuneration/commission to the agents/insurance intermediaries and other expenses debited to revenue accounts, but this should not include charge to profit such as income tax, wealth tax and service tax etc.
• Each board should approve policy for the allocation and apportionment of the expenses of managers within various segments of its firm.
• Certification should come from one of India's 'statutory auditors' in respect of compliance with the regulations (and the 'allocation'). The auditor also ought to certify that the allocation and apportionment of expenses is in accordance with board-approved policy.
• The chief financial officer, the appointed actuary, the chief executive officer and the compliance officer at every firm should sign returns, which the board should then 'adopt' on the recommendation of the audit committee.
• The allowance of the head office for a foreign branch should be set at 5% of the gross premium income written outside India.
• Separate allowances should exist for 'pure risk' products.
• The regulator should have the power to exempt this-or-that for an initial period of five years - at moments such as these, it is good for a firm to have the relatives of politicians on the board.
• IRDA to allow higher expenses provided that the excess is debited to shareholders’ fund
• IRDA should have further powers to allow higher expenses as long as the excess is debited to shareholders’ fund.
• Transitory provisions should exist to give insurers an option for the financial year of 2015-16 either to comply with the regulations or to the erstwhile rules.

Comments and suggestions should be in by 5th January. These reforms, if enacted, might lead to restrictions on performance incentives for whole-time directors and top managers. IRDA is promising to inhibit companies' attempts to open new places of business for some reason. The fourth point, which obliges several top functionaries at every firm to 'sign off' as regards the veracity of returns, is to be accompanied by a threat that IRDA can remove them from their posts if they lie.