As debate over obligatory cession rages, GIC Re could hold the solution

Whether obligatory cession should be cut to zero or retained could be resolved by allowing GIC Re to independently set commissions instead of Irdai mandating a fixed rate

The ongoing debate over whether obligatory cession should be abolished entirely — as many players in the non-life insurance industry have demanded — or retained in some form, could potentially be resolved by allowing state-owned GIC Re to set commissions for insurance companies independently, instead of the insurance regulator mandating a fixed rate. In this arrangement, the Insurance Regulatory and Development Authority of India’s (Irdai’s) role would be limited to determining the percentage of obligatory cession, industry experts suggested.

 

Obligatory cession refers to the portion of business that Indian general insurance companies must mandatorily cede to GIC Re, the national