By Venkatachari Jagannathan
Chennai, July 12 (SocialNews.XYZ) The General Insurance Corporation of India's (GIC Re) assured premium income under firing line all these years is now under threat.
Following the meeting of the CEOs of general insurance companies with Debasish Panda, Chairman, Insurance Regulatory and Development Authority of India (IRDA), the latter has set up a task force to look into various aspects of reinsurance.
However, the main issue of the nine-member task force chaired by Bhargav Dasgupta, Managing Director and Chief Executive Officer, ICICI Lombard General Insurance Company Ltd will be the obligatory cession to GIC Re - commissions on reinsurance business do not reflect industry cost structure and profit commission methodology.
The IRDAI Chairman Panda had met the CEOs of life, general and reinsurance companies at Hyderabad on June 30 and July 1.
Discussions were held on the issues/concerns related to reinsurance support to further increase in insurance penetration in India.
At the meeting primary insurers voiced their views against the placing four per cent of their reinsurance business compulsorily with GIC Re.
At the non-life insurance CEO-IRDAI Chairman meeting it became clear that no insurer wants this four per cent obligatory cession to continue.
"The companies (non-life insurers) get less than 50 per cent of their actual expenses of getting the business reimbursed by GIC Re. It became apparent that `carrying' GIC Re's inefficiency is no longer defensible," a top official of a private non-life insurer told IANS.
The main source of business for GIC Re are from two streams -- obligatory cession of four per cent by the primary insurers and the remaining 96 per cent market business.
Kamesh Goyal, and Prem Watsa (Founder and Chairman of FairFax Financial Holdings, Canada) the promoters of Go Digit General Insurance Company Ltd are venturing into the life and reinsurance segment.
It is learnt that Go Digit Life Insurance has been issued with R1 application form and Go Digit Reinsurance with R2 application form.
In 2019, the IRDAI cancelled the licence issued to the country's first private reinsurer ITI Reinsurance as it did not commence business within the stipulated time.
Without having a proper credit rating (IRDAI stipulated a three-year credit rating for a new company!) and due to the first preference for state-owned GIC Re in all businesses, ITI Re could not secure any business.
Be that as it may, the IRDAI has also set up a seven member task force for the life insurance sector's reinsurance chaired by Naveen Tahilyani, CEO and MD, Tata AIA Life Insurance.
(Venkatachari Jagannathan can be reached at v.jagannathan@ians.in)
Source: IANS
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