IRDAI allows GIC to retain its first right to offer reinsurance in India

The Insurance Regulatory and Development Authority of India (IRDAI) has allowed state-run General Insurance Corporation (GIC) to retain its first right to offer reinsurance in India, company officials told Bloomberg.

New regulations for the reinsurance business in India were finalised by the insurance regulator at its September 28 meeting and will apply to all segments of the insurance sector from March next year, when reinsurance contracts are renewed for the following year.

The insurance regulator accepted the order of preference as recommended by an expert committee on January 5, which faced opposition from Insurance Brokers’ Association of India, Global Reinsurance Forum (GRF) and Global Federation of Insurance Association (GFIA). GRF represents 67 percent of the world’s reinsurance capacity. GFIA is responsible for 87 percent of total insurance premiums worldwide.

According to these bodies, the suggestions were anti-competitive since they allowed GIC to maintain its monopoly.

The second preference will be other Indian reinsurers that have been in business for at least three consecutive years, sources told the website, adding that the third preference will be given to foreign reinsurance branches.

Fourth on the list will be insurance offices in International Financial Services Centre, GIFT City—the tax-free hub set up in Gujarat. If they also refuse, the insurer can obtain the best terms for reinsurance from overseas reinsurers with a minimum credit rating of A- from an international financial credit rating agency.