Insurance regulator IRDAI proposed that foreign reinsurers take back earned profit to their country. The repatriation of surplus from a branch of foreign reinsurer may be allowed if the available solvency margin is above 175 percent of the mandatory requirement, said a report. A seven-member committee headed by Thomas Mathew, former MD of LIC, is of the view that "regulations in the current form may not be applicable to reinsurance branches and the regulator needs to provide further clarifications or more amendments on the above regulations so as to enable stakeholders to provide relevant feedback".
The Insurance Laws (Amendment) Act, 2015, permitted foreign reinsurers to set up branch office in the country. Following the enactment of the new Act, it had become necessary to examine the issues related to opening of branch offices of foreign reinsurers. The committee was entrusted with the task of examining the minimum solvency capital requirements, registration insurers or reinsurers offices in IFSC, applicability of regulations on actuaries working in these entities and any other related matter.
The committee unanimously agreed that the risk-based capital (RBC) approach is the preferred way to assess the solvency capital of a foreign reinsurance company. However, the report said, it recognises that the introduction of RBC regime by the authority would involve a consultation process with the industry and hence, some amount of time will be required.
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