IRDAI has chosen to lower the minimum capital requirement for Foreign Reinsurance Business (FRBs) to Rs 50 crore from Rs 100 crore. This amendment is among other revisions in the reinsurance segment aimed at positioning India as a global insurance hub.
“The reduction in the capital requirement from the overseas reinsurers will definitely increase the number of reinsurers present in India, which was a long-standing demand from the industry,” said Salil Das, Director of Reinsurance at Alliance Insurance Brokers.
“Because they are shielded from the central office, they must invest more funds as a branch office. As a result, they must raise finance, which is now restricted. Reinsurers will be more prevalent; if there are more reinsurers in the market, the market will grow and reinsurance capacity will increase, allowing insurance companies to rise and dispose of surplus more easily, whereas they currently reach out to the international market," Das explained.
During its 123rd Authority meeting, the insurance regulator sanctioned a series of amendments to the Reinsurance Regulations to harmonise and streamline the existing regulations applicable to Indian insurers, Indian reinsurers, Foreign Reinsurance Branches (FRBs), and International Financial Services Centre Insurance Offices (IIOs).