 "Foreign reinsurers question Irdai proposal")
Foreign reinsurers have been thrown into a tizzy with an Insurance Regulatory and Development Authority of India (Irdai) proposal giving preference to Indian reinsurers in treaty reinsurance.
When the guidelines to acquire licence for opening branches were introduced, several foreign reinsurers, including Swiss Re, Munich Re, Hannover Re, SCOR and RGA (Reinsurance Group of America), had shown interest.
After the new proposal, however, many of them are having second thoughts. "The guidelines had been finalised and gazetted. The new norms (proposed) discriminate against foreign reinsurers and violate the principle of fair trade practices," said a senior official of a global reinsurance company.
The foreign reinsurers are also planning to take up the matter with the regulator. The draft released for public commentary by Irdai suggests 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.
General Insurance Corporation of India (GIC Re) is the sole domestic reinsurer and belongs to the public sector. According to norms, every insurer must reinsure a fixed percentage of total risk with the national reinsurer. For FY16, this rate has been fixed at 5 per cent, though it might change next year.
According to the proposed draft, GIC Re will give Indian reinsurers a preference.
Some global reinsurers from Europe, who were planning to enter India, have reportedly decided to wait and watch till the policy landscape gets clear.
In a similar move earlier, Irdai had asked foreign life insurance companies to reinsure a percentage of the sum insured with domestic reinsurers. This rate was supposed to be 0-30 per cent. However, this is yet to be implemented.
Reinsurance is a Rs 18,000-crore sector in India of which life insurance is little less than one tenth.
TIZZY OVER PROPOSED NORMS
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New norms discriminate against foreign reinsurers and violate the principle of fair trade practices, say foreign reinsurers
