IRDAI panel recommends easier operating rules for foreign reinsurers

A committee of the IRDAI has proposed to put in place a a slew of measures aimed at easing operations of foreign reinsurers, foreign reinsurance branches (FRB) and Lloyd's India.

The recommendations of the committee are set out in a report titled “Ease of doing business for Reinsurers, FRBs and Lloyd’s India”, which is available on the website of the insurance regulator.

The measures cover: capital and solvency; underwriting, product and claims; investments; operations; corporate governance and others. Among the measures which the IRDAI committee has suggested are allowing FRBs / Lloyd’s India to make yearly public disclosure of parent companies' business results instead of the current requirement of quarterly disclosures.

The IRDAI committee has also recommended certain waivers and concessions till such time as the foreign reinsurance entities reach a reasonable level of business volume in India. "It was felt that a gross premium level of INR50bn ($675m) would be a reasonable level to have a full-fledged operation and office for an FRB and Lloyd”, the report says. However, this can be subject to further review based on the market need and business development.

The concessions would relate to matters like the appointment of key management personnel; certification from an appointed actuary; and joint statutory audits.

The recommendations by the committee, which was appointed last October, are seen as a response to foreign reinsurers seeking equal rights in participating in reinsurance contracts. At present, locally incorporated state-run GIC Re has the first right of refusal in accepting business. IRDAI has not yet made a decision in this matter.

Currently, nine foreign reinsurers including Munich Re, Swiss Re, Gen Re, RGA, Hannover, Allianz Global, Axa Vie, XL Cat and SCOR have reinsurance branch operations in India. Specialist insurance market Lloyd's operates in India through its syndicates.

Source: Asia Insurance Review