Page 13 - Insurance Times August 2023

recently saying that the entire Obliga- intermediaries have held conversations
IRDAI allows combi prod-
tory Cession is to be placed with GIC Re with IRDAI on this matter and the regu-
only. Obligatory cession refers to the lator has been receptive to the idea of ucts under use-and-file
part of the business that general insur- MGAs too, industry insiders said.
system
ance companies have to mandatorily
A managed general agency is similar to
cede to the national reinsurer GIC Re. In a significant move, the IRDAI has
a non-banking finance company in the
allowed insurance companies to
Understandably, private general insur- banking space - it can onboard custom-
launch individual and group ULIPs
ers are against any obligatory cession ers, manage products, underwrite cus-
(unit linked insurance plans) and
to GIC Re as it doesn't give them any tomers, and also share the risk with
combi plans - combination of life and
freedom to place the reinsurance busi- larger insurance manufacturers. These
health insurance plans - without seek-
ness the way they like and with the types of entitles are popular in the US
ing prior approval from the regula-
reinsurers they like. The general insur- and Singapore, but do not exist in India
tor.
ers earn substantial commission out of as of now. "We have shared our thoughts
Combi products will be offered un-
any reinsurance business they place with the regulator on the idea of MGAs.
der the use-and-file procedure with-
with the reinsurers apart from the risk They have heard us out... and told us
out the prior nod of the insurance
cover. that they will examine its scope for In-
regulator.
dia," founder of a major insurtech
The IRDAI had constituted a panel un-
startup told on the condition of ano- According to IRDAI, in combi prod-
der Bhargava Dasgupta, MD of ICICI
nymity. "On these matters the regula- ucts, life insurer is a lead insurer and
Lombard General Insurance, to suggest
tor has been extremely receptive to such Combi products should comply
measures to phase out obligatory ces-
suggestions." with the extant norms. "Based on
sion and the panel had suggested phase-
the feedback from Industry and in
out the obligatory business along with
IRDAI asks insurers to order to facilitate the insurance in-
the right to first refusal by the GIC Re.
dustry to promote insurance pen-
speed up settlement of
Under the right to first refusal, GIC Re
etration, it has been decided to fur-
has the first right to choose the reinsur-
flood claims ther expand the scope of current use-
ance business from the general insur-
IRDAI has asked all general insurers and and-file procedure," the regulator
ers and then it can be placed with other
standalone health insurance firms to said.
reinsurers. The obligatory cession was
deploy resources and shrink response- With the IRDAI now allowing combi
reduced from 5 per cent to 4 per cent
time gaps after the worst deluge in de- product offerings, life and non-life
in FY23 and the IRDAI, in line with de-
cades battered north India, damaging companies can offer bundled prod-
mands of general insurers, had indi-
property and claiming multiple lives in ucts. Insurers can offer term insur-
cated that it will be further be reduced
the Himalayan foothills and the ance and health insurance covers
and can even be made zero. "Maybe
Gangetic floodplains. through the same product, thereby
the government thinks removal of
easing the process for policyholders.
obligatory cession will impact the per- The regulator has asked insurers to use
formance of GIC Re," said an insurance all resources including engaging inves- The regulator has also decided to do
official. tigators, surveyors, and loss adjusters away with the Segregated Fund Iden-
to speed up claims settlement. IRDAI tification Number (SFIN) clearance
IRDAI considering man- has advised insurers to nominate a se- process for Ulips, the circular said.
nior executive in each affected state or
aged general agencies in Sumit Rai, MD & CEO Edelweiss Tokio
union territory (UT) and promptly com- Life Insurance, said, "This is a con-
insurance municate this appointment to the re-
tinuation of a series of steps that the
The insurance industry could see a new spective chief secretary or officer to regulator has taken to strengthen
set of licences in the form of managed ensure efficient coordination. the insurance penetration in the
general agencies, or MGAs, as the in- country. This modification will enable
Claims service heads have been desig-
surance regulator is looking at the vi- insurers to increase their go-to-mar-
nated to oversee districts reporting a
ability of such entities for the Indian ket speed and in turn, help them stay
high number of claims, helping stream-
market. in sync with the dynamic demands of
line the process and facilitate prompt
today's customers."
Multiple founders of large insurance assistance to affected policyholders.
The Insurance Times August 2023 11