India: Foreign reinsurers' branches can now bid alongside domestic rivals
Source: Asia Insurance Review | Jan 2019
In a breakthrough move, foreign reinsurers’ branches (FRBs) in India will now be able to bid for reinsurance contracts along with Indian reinsurers. At present, GIC Re is the only active Indian reinsurer.
The much-awaited IRDAI (Reinsurance) Regulations, 2018 issued by IRDAI on 12 December 2018 allow GIC Re to retain the right of first refusal. However, in instances where FRBs offer rates lower than GIC Re and GIC Re cannot match those rates or GIC Re does not exercise its right, FRBs can win those reinsurance contracts.
A clause in the new reinsurance regulations, which came into effect on 1 January 2019, reads, “Every cedant shall be free to obtain best terms for its reinsurance protection of domestic risks, subject to the following:
“‘Cedants shall seek terms at least from all Indian re-insurers, who have been transacting re-insurance business (other than emanating from obligatory cession) during the immediate past three continuous years and at least from four FRBs.’” A