IRDAI draft norms for priority to local reinsurers

IRDAI has come out with draft regulations that require reinsurance buyers to give priority to GIC Re and multinationals that have branches in India. Insurance brokers and their clients are not very happy with this proposal as till now they were free to approach any cross-border reinsurer. Insurance Brokers Association of India, has written to IRDAI, objecting to the new rules. “The prescriptive measures under the regulations require the consumer to approach reinsurance providers in preferred order without any choice to the consumer of the service and creating right of first refusal (RoFR) effectively at each category, which is extreme form of anti-competition,” the letter said. “Choice is a fundamental right of the consumer and this is fully compromised under these draft regulations,” the IBAI letter added. An official with a corporate group said, “We have been buying insurance on basis of support from overseas reinsurers with whom we had business relations for decades. The new norms force us to go to domestic companies first.”An IRDAI source said, maximisation of premium retention within the country is a regulatory objective set by the government.