As India’s reinsurance business continues to achieve impressive growth, recent regulatory changes by the Insurance Regulatory and Development Authority of India are set to encourage offshore companies to set up operations in the country
Data analytics company GlobalData believes these amendments will not only bring a level playing field for all the competitors but also drive growth of India’s reinsurance market to reach $7.8 billion.
Reinsurance premium in India grew from $3.5 billion in 2016 to $6.2 billion in 2019, at a compound annual growth rate of 22.3%.
GlobalData notes how this growth has coincided with amendments to the market entry norms by IRDAI in 2015, allowing foreign reinsurers to set up branch offices.
Up to that point, General Insurance Corporation of India (GIC Re) had a monopoly in the reinsurance market.
“Regulatory amendments were introduced in 2018 to increase competition by allowing foreign reinsurer branches (FRBs) to bid for contracts,” said Shabbir Ansari, Insurance Analyst at GlobalData.
“Till then foreign reinsurers could only bid in case it was rejected by GIC Re.”
GlobalData states that GIC Re, the tenth largest reinsurer globally, is facing decline in its home market.
While it still has the first right of refusal for all reinsurance contracts, by matching FRBs quote, there are expectations that this will also be removed.
“Further capital requirements were lowered from INR50bn to 10bn. All these changes helped offshore reinsurer increase their market share from 0.2% in 2016 to 24% in 2019,” added Ansari.
