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General Insurance Corporation of India (GIC Re), the sole domestic reinsurer has sought clarity on its status as “national reinsurer” after new domestic players enter the market. Currently, they receive five per cent mandatory cession from non-life insurance companies, being the only Indian reinsurance company.
Senior officials said once new entities enter the reinsurance space, it is not clear as to what the future of mandatory risk ceding would be.
ALSO READ: GIC Re posts 19.5% growth in net profit at Rs 2,694 cr
“Being the only domestic reinsurer, we have regulatory norms that mandate general insurers to transfer a portion of risk to us. We may get a national reinsurer status and have sought clarity on this,” a company official said.
Manohar Joshi-led Kohinoor Group has also applied for a reinsurance licence and if granted the approval will be for the first Indian private sector player in this space.
Though non-life insurers were earlier mandated to transfer 10 per cent of their risks to GIC Re, this has been reduced to five per cent. This fixed cession could vary from one year to another, and it was 20 per cent several years ago. There has been an emphasis by the regulator to retain most of the reinsurance business within the country.
Experts said this would make the Indian reinsurance industry healthier. Apart from this, the regulator has also allowed foreign reinsurers to set up branches in India. This would mean they would be able to deal with Indian clients more closely and hence would be able to provide better pricing.
While the regulator has clarified that there will be a level playing field for all reinsurers doing business in India, it is implicit that some incentives for domestic players would be there.
Indian insurers often spread their risks, especially in the commercial and industrial insurance space, among several reinsurers so that risks are evenly spread and there is adequate capacity to cover it.
Senior officials said once new entities enter the reinsurance space, it is not clear as to what the future of mandatory risk ceding would be.
ALSO READ: GIC Re posts 19.5% growth in net profit at Rs 2,694 cr
“Being the only domestic reinsurer, we have regulatory norms that mandate general insurers to transfer a portion of risk to us. We may get a national reinsurer status and have sought clarity on this,” a company official said.
Manohar Joshi-led Kohinoor Group has also applied for a reinsurance licence and if granted the approval will be for the first Indian private sector player in this space.
Though non-life insurers were earlier mandated to transfer 10 per cent of their risks to GIC Re, this has been reduced to five per cent. This fixed cession could vary from one year to another, and it was 20 per cent several years ago. There has been an emphasis by the regulator to retain most of the reinsurance business within the country.
Experts said this would make the Indian reinsurance industry healthier. Apart from this, the regulator has also allowed foreign reinsurers to set up branches in India. This would mean they would be able to deal with Indian clients more closely and hence would be able to provide better pricing.
While the regulator has clarified that there will be a level playing field for all reinsurers doing business in India, it is implicit that some incentives for domestic players would be there.
Indian insurers often spread their risks, especially in the commercial and industrial insurance space, among several reinsurers so that risks are evenly spread and there is adequate capacity to cover it.
