The Indian insurance regulator, IRDAI, will allow reinsurance companies to invest outside India so as to diversify investment portfolio risk, and to promote the country as a major reinsurance hub.
“The insurance regulator is working on relaxing investment norms for reinsurance companies, allowing them to invest outside India to diversify their risks,” a source close to the development told The Economic Times. “The IRDAI is likely to allow these companies to invest in sovereign debt of other countries with A and above rating. IRDAI is studying the regulations of other countries.”
State-run locally incorporated GIC Re manages assets worth about INR1,100 billion ($16.3 billion), while foreign reinsurance companies that have set up shop in India are increasing their funds. Foreign reinsurers have to invest 50% of the premium earned in India in the country.
Foreign reinsurance companies were allowed to open branches in India in 2015. At present, there are eight foreign reinsurance companies operating through branches in India.