IRDAI to allow foreign reinsurers to open branches soon

Regulator has been processing applications of four foreign firms that want to open branches in the country

Insurance Regulatory and Development Authority of India(IRDAI) is likely to clear the applications filed by the overseas reinsurance companies to open their branches in India in another 3-4 months time.

IRDAI chairman T S Vijayan on Tuesday said four foreign reinsurers had filed applications to open their branches and they have been processing those applications.

"I think it will take another 3-4 months to clear(the applications). May be we will be finalising the decision by next board meeting," Vijayan said in response to a question in this regard on the sidelines of the Insurance Awareness day.

In March last year the Indian Parliament has passed the Insurance Laws (Amendments) Bill, also paving the way for opening of branches by reinsurers from outside India. According to Vijayan, Swiss Re, Lloyds, Munich Re and Hanover Re have already filed their applications to open their branches in the country.

Vijayan believes that the entry of these reinsurers will help Indian insurance companies to access the global capital. The foreign reinsurance players will have to retain 50 percent of the premium in India, he said.

Meanwhile, the IRDAI chairman said in the current year the insurance sector was likely to do even better on the back of good monsoons forecasts. He said both life and general insurance sectors achieved a double digit growth in the last financial year while the health insurance registered between 35-40 per cent growth in premium collections.

"Though the final numbers are yet to come, the general insurance sector collected a premium of Rs 96,000-odd crore last year while the first year premium collection by life insurance sector was about Rs 1.36 lakh crore," he said.

Earlier in his address Vijayan said the compensation being awarded by courts in insurance claim litigations were growing higher and higher and it will have an impact on the premiums.