The board of insurance regulator IRDAI has met on Friday under its chairman Subhas Khuntia and has cleared the long pending revised reinsurance regulations where state owned reinsurer GIC Re's predominance in the Indian reinsurnace market has been retained.
Effectively, the existing provision in the regulations that allows GIC Re, the first right to refusal over other foreign players that are having branch operations in the country and offshore players in the matter of acceptance of reinsurance business, has been retained in the revamped reinsurance norms.
At present there are almost 10 global players including Munich Re, Swiss Re, Hannover Re, SCOR,Lloyd's, RGA, Warren Buffet owned Gen Re,AXA,XL Catlin,who have set up their branch operations in the country. Besides, Prem Watsa owned Fairfax that took over Sudhir Valia owned ITI Reinsurance is waiting for the regulatory approval for the deal from the IRDAI to start their operations in India with a new name.
The revamped regulations aim to ensure that maximum reinsurance business is retained within the country and preference would be given to Indian domiciled entities — with the first right of refusal lying with the GIC Re and then cascading down to foreign reinsurers (FRBs) and other ‘Indian reinsurers’. The spillover should be placed with cross border reinsurers (CBRs), fulfilling certain laid-down criteria.
“Yes, we have cleared the revised regulations on the basis of the recommendations of the Ram Prasad Panel,’’ said sources at IRDAI.
However, today's board meeting has not been able take up other agenda like various levels of the approvals for the licenses of the new players have not happened on
“We havn’t discussed about any approvals for any new players,’’ said sources.
It was expected that along with a few non life players particularly in the health insurance segment, Indiabulls group,owning the second largest private sector housing finance company in the country, may be given approval for floating a life insurance company.
Indiabulls group,is once again looking to expand into the life insurance business. Prominent enterpreneur Laxmi Narayan Mittal is a major promoter in Indiabulls.
The IRDA on 5th May, 2017.had constituted an `Expert Committee on Reinsurance’ headed by former member of IRDAI, M Ramprasad to revamp the existing reinsurance regulations set-up and to streamline further reinsurance operations in the country.
The committee, that had members including foreign reinsurers and other experts, had unveiled the draft regulation “Insurance Regulatory and Development Authority of India (Reinsurance) Regulations, 2018’ for industry feed-back on Jan 05.
The Draft Regulations had sought to do away with different categories (i.e. Category I and Category II) of applicants, currently mentioned under the FRB Regulations and Lloyd’s Regulations. It is proposed that an applicant shall make a requisition for registration application for reinsurance business wherein the branch office of a foreign reinsurer (FRB) shall maintain a minimum retention of 50% of the Indian reinsurance business.
The Draft Regulations had proposd changes to certain existing definitions in the General Reinsurance Regulations and Life Reinsurance Regulations. It also proposed to introduce new definitions of the terms like alternative risk transfer (ART),Reinsurance Slip, Retrocedant,inclusion of “crop” as a separate Insurance Segment, Board,Exempted Insurer, International Financial Service Centre Insurance Office (IIO).