Refusing to tweak norms, regulator Irdai has asked insurers to refrain from entering into common reinsurance arrangements on global basis with foreign entities wherein they do not have much say in taking vital decisions.
It had received requests from some insurers seeking waiver of certain provisions of IRDA (General Insurance-Reinsurance) Regulation 2013, citing inability to comply with the stipulations.
The insurers sought exemption saying they were executing reinsurance treaties on a global basis where the Indian insurer along with their foreign promoter entity/ subsidiaries /group companies enter into a common reinsurance agreement with one or more reinsurers.
The regulator said that it has been observed that in such arrangements, where Indian insurer enters into reinsurance arrangements on a global basis, the Indian entity is "unlikely to have much say in taking vital decisions" on matters like the choice of the reinsurer, terms of treaty, and the quantum of placement with any reinsurer.
Hence, compliance of various provisions of reinsurance regulations, other guidelines and circulars issued by Irdai on matters related to reinsurers, may not be possible for the Indian Insurers, it said
"Therefore, insurers are hereby advised to refrain from entering into such reinsurance arrangements," it said, adding "The Authority shall not entertain any request for exemption from the application of provisions of Reinsurance regulations/ guidelines/circulars, if such non-compliance is on account of the insurer's participation in such reinsurance arrangements".
Insurance Regulatory and Development Authority of India (Irdai) also asked the general insurance companies and standalone health insurance companies and GIC Re to strictly comply with IRDA (General Insurance-Reinsurance) Regulation 2013 and amendments/revisions thereto.
Irdai also noted that the reinsurance needs of the Indian insurance company may vary from that of their foreign partner or group companies located in other countries.
The terms, conditions, exclusions, claims experience of the underlying products for which the reinsurance protection is sought may also vary from one insurance company to another.
