India: Insurers told to avoid unequal international reinsurance pacts
Source: Asia Insurance Review | Jun 2016
The insurance regulator has asked insurers to refrain from entering into common reinsurance arrangements on a global basis with foreign entities in cases where they lack sufficient say in vital decisions.
IRDAI said that it has been observed in such arrangements that the Indian entity is unlikely to have much say on matters like the choice of the reinsurer, terms of treaty, the quantum of placement with any reinsurer etc. Hence, compliance of various provisions of the reinsurance regulations, other guidelines and circulars issued by the Authority on matters related to reinsurers, may not be possible for the Indian Insurers.
“The Authority shall not entertain any request for exemption from the application of provisions of reinsurance regulations/guidelines/circulars, if such non-compliance is on account of the insurer’s participation in such reinsurance arrangements.”
Several insurers had approached IRDAI seeking a waiver from having to comply with certain regulations, citing their inability to comply with the stipulations because of the conditions of common reinsurance agreements entered into abroad.