 "Indian reinsurers to get first preference in treaties: IRDAI Chairman")
Indian reinsurance companies will get the first preference in treaties, chairman of Insurance Regulatory and Development of India (IRDAI), T S Vijayan, said today.
The right of first refusal will be given to domestic reinsurers, Vijayan said, while speaking to the media on the sidelines of the FICCI Annual Insurance Conference.
“First preference is for Indian reinsurers and then to reinsurers for those who would have a branch presence in the country,” said the IRDAI chairman.
Foreign reinsurers had written to the government and the insurance regulator and met finance ministry officials to discuss this issue. This was after the IRDAI had added a new proposal in the guidelines on branch licences for foreign reinsurers, where it said first preference would be given to Indian reinsurers in their treaty surpluses.
This means that first preference in all such agreements between reinsurers and insurers will be given to Indian reinsurers. Only if a risk is not taken by an Indian reinsurer will it be passed on to others.
Swiss Re, Munich Re, Hannover Re, SCOR and RGA (Reinsurance Group of America) had applied for branch licences after the final guidelines were issued. These reinsurers have held several rounds of discussions among themselves on how to take up the matter with the regulator.
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XL Catlin has also announced that it has applied for reinsurance branch license in India.
Currently, General Insurance Corporation of India is the sole Indian reinsurer.
In India, reinsurance industry is worth Rs 18,000 crore of which life insurance constitutes about Rs 1,200 crore.
On new regulations, Vijayan said that three to four draft norms would come in and the process would be completed by March end. He explained six applications for reinsurance branch license have been received and that they will be able to give first stage or R1 in the process of licensing by their next board meeting to some of them.
On expenses of management, Vijayan said that they are looking at how the different product segments are performing. In life insurance segment, he explained that they are looking at if participating or with-profit products are being costed correctly or not.
Speaking on commissions, he said, “We are looking at the margins of insurers and their ability to pay commissions within that.”
On corporate agents like banks opening up their branches to more than one insurer, Vijayan said that those those who want to do more business and give choice to customers can open up branch network.