Foreign reinsurers can now outbid GIC Re for business in India

Foreign reinsurers operating in India will now stand a better chance of winning business in the country after the Insurance Regulatory Authority of India (IRDAI) changed its rules around how domestic insurers buy reinsurance, according to media reports in India.

Previously, domestic reinsurer GIC Re had the right of first refusal on business ceded by domestic companies. Now, in an important change, if other reinsures offer better rates than GIC Re, they will win the business. Previously, reinsurance deals would only be offered to foreign firms if GIC Re turned down the business.

Foreign reinsurers have been lobbying the IRDAI for some time to scrap GIC Re’s first right of refusal. The new changes will come into force from January1, 2019.

The new rules also encourage insurers to maximise retention within the country “subject to adequate diversification of risks”. But this change should mean more business coming the way of foreign players operating in the country.

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