IRDAI proposes changes to reinsurance rules

The insurance regulator has released an exposure draft seeking amendments to reinsurance regulations.

In the draft, the Insurance Regulatory and Development Authority of India (Irdai) has sought to revise the order of preference while placing reinsurance business, among other things, which could prove to be undesirable for state-owned General Insurance Corporation (GIC Re).

“The objective of these regulations is to harmonise the provisions of various regulations applicable to insurers and reinsurers, including foreign reinsurance branches (FRBs), and Lloyd’s to enhance ease of doing business by amending the regulations,” Irdai said in a circular.

Currently, Indian insurers are required to seek best terms for their facultative and treaty surpluses from Indian reinsurers holding minimum prescribed credit ratings for the past three years, now on General Insurance Corporation (GIC Re), and three category I branches of foreign reinsurers.

Following that, the insurer has to offer best terms for participation to the various reinsurance providers in the following order: GIC Re and then category I branches; other Indian reinsurance companies or category II branches; foreign reinsurers’ branches in special economic zones; and other Indian insurers and cross-border reinsurers.

The regulator is proposing that in the order of preference first there will be the category I Indian reinsurers, including GIC Re, foreign reinsurance branches (FRBs), Lloyd’s India, and International Financial Service Centre Insurance Offices (IIOs).