IRDAI(Reinsurance) (Amendment) Regulations, 2023

Some major changes in the IRDAI (Reinsurance) (Amendment) Regulations 2023

1.      The IRDAI (Reinsurance) Regulations, 2018 would not apply to IIOs i.e. International Financial Services Authority (IFSC) Insurance Offices.

2.      Review of these regulations will be taken up every 3 years, unless there is a pressing necessity

3.      Every Indian reinsurer including Foreign Reinsurers branches (FRBs) shall maintain a net retention within India of 50% of the Indian reinsurance business underwritten. Retrocession to an IIO up to 20% of the Indian reinsurance business underwritten shall be counted as part of the 50% retention limit.

4.      The time limit of 30 days from the start of the financial year for any Indian insurer to file with the Authority its reinsurance program with details of reinsurers in each segment has been extended to 45 days.

5.      The Board approved final reinsurance program should highlight the improvements in net retention segment-wise as compared to the previous reinsurance program, duly marking out the variances.

6.      The CEO of every insurer should submit to the Authority a certificate within 90 days of commencement of the financial year confirming receipt of all original treaties ( proportional & non-proportional) duly stamped and signed by all treaty participants.

7.      Every Indian reinsurer and FRBs writing reinsurance business shall submit to the Authority their Board approved underwriting policy. Any subsequent change in policy has to be approved by the Board and filed with the Authority within 15 days of the Board approval.

8.      Every Indian insurer shall submit soft copies of list of reinsurers in each segment, their credit rating and their shares in the proportional and non-proportional treaties, to the Authority along with the reinsurance program.

9.      Reinsurance placements with any international pools or arrangements having CBRs as members, participants or administrators shall require prior approval of the Authority.

10.  Lead terms shall be sought by any cedant ( other than obligatory cessions) from every Indian reinsurer transacting business in the last 3 financial years and at least 4 Category 2 reinsurers.

11.  No cedant shall seek lead terms from any FRBs/IIOs having S & P or any equivalent  international agency  rating below A(-). This limitation will not apply if the IIO is a subsidiary or a branch of an Indian insurer.

12.  Except for facultative reinsurance, no cedant shall seek terms from any Indian insurer not registered with the Authority exclusively for transacting reinsurance business or an IIO not permitted by the IFSCA to transact reinsurance business.

13.  Whether placed directly or through a reinsurance broker, the cedant shall be responsible and accountable for complying with these regulations.

14.  The order of preference will be as under:

·       Category 1 – Indian reinsurers

·       Category 2 – IIOs (which invest 100% of Indian insurance premium in the Domestic Tariff Area (DTA) & frbS

·       Category 3 -Other IIOs

·       Category 4 – Other Indian  insurers( only for facultative placements in segments where they are authorised/registered) and CBRs

15.  The cession limits placed on reinsurance with CBRs shall not be applicable to cedants who place less than Rupees seventy five crores of premium outside Indian with CBRs having a credit rating of BBB (+) and above.

16.  Any FRB shall have a minimum assigned capital of Rupees fifty crores for the branch office.

17.  Any retrocession of upto 20% by a FRB to an IIO will be reckoned as part of the 50% minimum required retention in India.

18.  Any retrocession of upto 20% by Lloyds India to an IIO will be reckoned as part of the 50% minimum required retention in India.