The percentage of business that general insurers in India have to cede to the country’s national reinsurance company, General Insurance Corporation of India (GIC Re), for 2019-2020 is to remain at 5%, according to a notification from the Insurance Regulatory and Development Authority of India (IRDAI).
The regulator says the 5% cession of the sum insured on each general insurance policy is in respect of insurance policies that attach during the financial year beginning April 1st, 2019 to March 31st, 2020, except terrorism premium and that which is ceded to the country’s nuclear risk pool.
The IRDAI sets the cession rate to GIC Re, India’s sole domestic reinsurer, on an annual basis.
GIC Re also benefits from first refusal in any reinsurance contracts, a stance upheld in October 2018, and despite more relaxed regulations enabling and resulting in the establishment of foreign reinsurance operating from local branches, these are not eligible to receive mandatory cessions.
Regarding commission, the obligatory cession varies for different classes of business. For example, a minimum 5% cession applies for Motor TP and Oil & Energy insurance, and a minimum of 10% for group health insurance.
India has ambitions of establishing itself as a leading, global insurance and reinsurance hub. The IRDAI said recently that there’s plenty of room for its re/insurance industry to expand “aggressively and inclusively.”