Indian insurers can now invest in fund of funds

But they can not invest into policyholder funds outside India.

Indian insurers are now allowed to invest in fund of funds (FoFs), according to the Insurance Regulatory and Development Authority of India (IRDAI).

The regulator stipulated that an insurer invest only in alternative investment funds (AIFs) which comply with Section 27E of the Insurance Act, 1938.

Insurers shall not invest directly or indirectly into policyholder funds outside India. No investment is permitted into AIFs which undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted under SEBI (AIF) Regulations.

In addition, no insurer shall invest in an AIF, which in turn has exposure to a FoF, in which the insurer has already taken an exposure.

Moreover, insurers shall on a quarterly basis obtain a certificate issued by the concurrent auditor affirming compliance of the above conditions and file the same along with quarterly periodical returns.