Foreign reinsurance companies have made another appeal to the IRDAI to relax the order of preference for reinsurance business in India, before reinsurance contracts are due to be renewed on 1 January.
Despite multiple requests from foreign reinsurers to reconsider the order of preference, IRDAI has maintained that the national reinsurer GIC Re will hold the first right of refusal, reports Moneycontrol.
New regulations for the reinsurance business in India were finalised by the IRDAI at its 28 September 28 meeting that gives GIC Re the first right to accept reinsurance usiness in India.
A senior official at a global reinsurance firm said, “We have made significant investments in the country and would seek an equal opportunity to compete in contracts. Else, we would have not set up a branch presence in India.”
According to the rules, only if GIC Re refuses to write a risk on their books is it passed on to other reinsurers. The second preference will be other Indian reinsurers that have been in business for at least three consecutive years and the third preference will be given to foreign reinsurance branches.
Fourth on the list will be insurance offices in International Financial Services Centre, GIFT City in Gujarat. If they also refuse, the insurer can obtain the best terms for reinsurance from overseas reinsurers with a minimum credit rating of A- from an international financial credit rating agency.
Last year, several foreign reinsurers received branch licences to operate in India, following amendments in 2015 to the insurance law allowing reinsurers to set up branches in India.