Private reinsurance company ITI Reinsurance (ITI Re) is all set to officially launch operations by the end of this month.
ITI Re is promoted by Fortune Financial Services
(India) Limited (FFSIL) which in turn is promoted by Sudhir Valia. It is the first private sector reinsurance company in India. It recently received the final licence from the insurance regulator to commence operations.
R Raghavan, chief operating officer of ITI Re, told Moneycontrol that they have now been given the Indian reinsurer status. By law, insurance companies will have to park 5 percent of premium with an Indian reinsurer. Till now General Insurance Corporation of India (GIC Re) was the only domestic reinsurer in the space.
He explained that ITI Re will be a lean company and it will begin slow. The core team is already in place and they are hiring personnel in junior roles.
“We will tie up with big companies and we are also looking into their financial metrics before we do business with them,” he said.
A reinsurance company is involved in providing financial protection to insurance companies from the risks arising in the business. It helps them cede or transfer a risk to them to avoid any financial implications due to a large claim.
Currently, GIC Re and ITI Re are the only Indian reinsurers. Apart from them, foreign reinsurers like Swiss Re, Munich Re, Hannover Re, RGA Life Insurance Company of Canada and SCOR Re have been permitted by the regulator to set up a branch in India.
Raghavan said that the company will be based out of Mumbai and is readying itself to launch before the April 1 reinsurance treaty renewals.
Apart from the commercial business segments, ITI Re is also betting big on the agriculture reinsurance space with the Pradhan Mantri Fasal Bima Yojana getting several insurers on board.
This scheme which was approved by the Cabinet in 2016 has a uniform premium of 2 percent to be paid by farmers for all kharif crops and 1.5 percent for all rabi crops. For commercial and horticultural crops, the farmers’ premium is 5 percent. The rest of the premium will be paid by the government.
The government is planning to spend Rs 5,500 crore on the crop insurance scheme. Both private sector and public sector insurers are part of the scheme.