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The Insurance Regulatory and Development Authority of India (IRDAI) has received applications from six foreign reinsurance companies for opening branches in India.
This development comes even as the insurance regulator recently did an about-turn in its reinsurance regulations and said that Indian reinsurer(s) will be given first preference in reinsurance treaties compared with the branches of foreign reinsurers.
Incidentally, foreign reinsurers had written to the Centre seeking relaxation on the proposal to give Indian reinsurers first preference in premium ceding.
Among the foreign reinsurers that have applied to the regulator to set up base in India are Swiss Re, Scor, Munich Re and XL Catlin.
Speaking on the sidelines of the FICCI Insurance Summit, TS Vijayan, Chairman, IRDAI, said, “The predominant thought process is that if there is a reinsurance company established and fully capitalised in India and it should get a better opportunity at reinsurance treaties than a branch of a foreign reinsurer opening operations here. We want to distinguish between Indian reinsurer and branches of the reinsurer.”
What this means is that government-owned General Insurance Corporation of India (GIC Re), which is the sole domestic reinsurer, will now enjoy preference in reinsurance treaty agreements. Vijayan said that the R1 application (first stage application) for some reinsurers is expected to go through in the next board meeting.
The IRDAI chief said that some insurers have sought clarifications on the ‘Indian ownership and control clause’ in the regulations governing insurance joint venture agreements after passage of the Insurance Regulation Bill. IRDAI had asked insurers to rework their joint venture agreements to incorporate Indian ownership and control clause to which many insurers have sought additional time to comply with.
Correction
An earlier version of this news story incorrectly mentioned the company XL Catlin as Catlin.
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