Money & Banking

New reinsurance regulations are credit positive: Moody’s

Surabhi Mumbai | Updated on December 19, 2018 Published on December 19, 2018

GIC-RE

Moody’s Investor Service on Wednesday said the new regulations for re-insurance in India are credit positive. “They will improve Indian insurers' access to a broader reinsurance base, which will support their management of underwriting risk and performance,” it said.

The Insurance Regulatory and Development Authority of India (IRDAI), Indian reinsurer — General Insurance Corporation (GIC) will have the first right of refusal, but will be required to simultaneously seek terms from at least four foreign reinsurance branches, allowing the non-Indian reinsurers to compete for business on equal terms with Indian reinsurers.

This is a change from current norms where Indian reinsurers have the first preference and right of refusal. Non-domestic reinsurers are offered business if only Indian reinsurers refuse the business.

“IRDAI's new reinsurance regulations are another step to liberalise the reinsurance market and were preceded by admitting foreign-based reinsurers to India's market,” Moody’s said, adding that it will provide local insurers broader access to foreign reinsurers and encourage them to sharpen their use of reinsurance as a risk management tool with the aim to reduce P&L and balance sheet volatility.

Published on December 19, 2018
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