Irda Asks Insurers To Share Risk Premium With Gic

Regulator move draws frowns from industry

The Insurance Regulatory and Development Authority (Irda) today has made it mandatory for all life insurance companies to share a percentage of the risk premium with the national reinsurer, General Insurance Corporation of India (GIC).

Till today, the life insurance industry had full liberty to reinsure their programmes with foreign reinsurance companies, resulting in huge foreign exchange outgo.

This move by the regulator has sent the private life insurance players into a tizzy as this will affect their ability to offer the best price for their products in the Indian market, and in the process affect consumer interest.

 

The Irda chairman N Rangachary told the life insurance council that the Life Insurance Corporation of India (LIC) is giving 10 per cent of its risk premium business to GIC, and that the private insurers ought to look at ceding a part of their business to the national reinsurer as well.

LIC started ceding 10 per cent of its risk premium since the beginning of the fiscal to GIC. The national reinsurer estimates crore of rupees additional business coming to its books as the Irda makes it compulsory for all life players to share the risk premium.