The obligatory cession for the financial year 2026-27 will be retained at 4% and will be entirely placed with the state-owned Indian reinsurer GIC Re.
A notification issued by the Indian regulator, Insurance Regulatory and Development Authority of India (IRDAI), on 17 April 2026 said, “The percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian Re-insurer(s) shall be 4% in respect of insurance attaching during the financial year beginning from 1 April 2026 to 31 March 2027, except the terrorism insurance premium and premium ceded to Indian Nuclear Insurance pool wherein it would be made ‘Nil’. The entire obligatory cession is to be placed with GIC Re only.”
There are two other Indian reinsurers, namely, Valueattics Reinsurance Company and Allianz Jio Reinsurance. Both companies have started operations in the country.
The proportion of cessions has been progressively reduced in stages from 20% in the year 2000 to 15%, to 10%, to 5%, and then to 4%. The 4% requirement has been held constant since it was mandated in FY2022-23.
The percentage of the commission payable on obligatory cessions for different classes of business is as follows:
-Minimum 5% for Motor Third Party and Oil and Energy insurance
-Minimum 10% for Group Health insurance
-Minimum 7.50% for Crop Insurance
-Average terms for Aviation insurance
-Minimum 15% for all other classes of insurance business.
Any commission rate over and above the minimum stipulated is to be mutually agreed between Indian reinsurer(s) and the ceding insurer.
GIC Re will share the profit commission on a 50:50 basis with the ceding insurer, based on the performance and surplus of the total obligatory portfolio of the ceding insurer, subject to certain conditions.