M Saraswathy Moneycontrol News
International reinsurers will face a review in December this year with respect to the right to first refusal.
This rule, which said that the state-owned General Insurance Corporation of India (GIC Re) will have the first right to accept or refuse any reinsurance treaty, will come under review in the next six months.
When the guidelines to acquire licence for opening branches were introduced, several foreign reinsurers had expressed interest in setting up an India branch. However, they were disappointed by the inclusion of the right to first refusal proposal that gave more rights to GIC Re.
While several representations were sent to the Insurance Regulatory and Development Authority of India (IRDAI), this provision was retained and it was stated that this will be reviewed after a year. Sources said that to give Indian reinsurers more rights was a decision as directed by the government.
Currently, global reinsurers with a branch licence include Swiss Re, Munich Re, Hannover Re, SCOR Re, RGA (Reinsurance Group of America), XL Catlin and Gen Re apart from specialist insurance market Lloyd’s.
Executives of the global reinsurers are hopeful of getting into the first category in terms of reinsurance treaties. “Most of the global reinsurers have been in business for several years," said a senior official of a global reinsurance company. "Hence, we should be at an equal position in terms of procurement of new business or renewal of existing treaties.”
The aim of the insurance regulator is to have maximum business reinsured within the Indian territory with domestic capacity and only the rest being passed on to foreign reinsurers. Though the foreign reinsurers were already writing Indian business, they are now in closer proximity to the clients, thus giving them the advantage to assess and price the risks better.
Even during the April 1 renewals of reinsurance treaties where the rates were more or less flat, sources said that global reinsurers did not play a major role and they are waiting for a little more time before getting into major treaty reinsurance contracts.
Apart from GIC Re, there is another domestic reinsurance company, ITI Reinsurance, which had been granted final licence in December 2016.
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