IRDAI Group to order Treaty reinsurance choices

The Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to make a decision on the order of preference in reinsurance cessions.

The committee will have members from life, general, and health sectors as well as representatives from General Insurance Corporation of India, General Insurance Council, Marsh India, Lloyd’s and Munich Re.

The committee will look into laying down the procedure and modus operandi for order of preference for cessions in respect of all life, general and health insurance business, stated a Business Standard report.

Further, it will also look at guidelines for implementation of the procedure including defining the rights and obligations of all stakeholders involved.

It would also look at timelines for offer of best terms, order of preference-wise.

In December 2015, foreign reinsurers contested a proposal by the regulator giving preference to Indian reinsurers in treaty reinsurance.

Several foreign reinsurers, including Swiss Re, Munich Re, and RGA (Reinsurance Group of America), have received R1 or initial license from Irdai.

Foreign reinsurers had contested that these proposed norms discriminated against foreign reinsurers and violated the principle of fair trade practices. IRDAI in this proposal had suggested that an Indian insurer should give preference to a foreign reinsurer. Only if this doesn’t work out, can it approach those foreign reinsurers who have the requisite licence.