Page 7 - Insurance Times January 2018 Sample

IRDAI

News

Insurers can now appoint IRDAI committee for waiver of compulsory cession for

professional promoters certain classes
Two former CEOs of insurance compa- The Reinsurance Expert Committee The REC has proposed that reinsurers
nies - Rajesh appointed by IRDAI has proposed that should be classified into two categories
Relan (ex- the stipulation of order of preference for offer of participation in the follow-
CEO of PNB for reinsurance cessions - or compul- ing order of preference: GIC Re and
MetLife) and sory cession of business to GIC RE - then (simultaneously to other) Indian
P Nandgopal could be waived for cer- reinsurers, cross-border
(ex-CEO of tain classes of business. reinsurers (CBRs), if any,
both IndiaFirst) - are turning into The Committee, chaired whose terms for a mini-
health insurance entrepreneurs. by M Ramaprasad, said mum line size (say 5 per
IRDAI's decision to permit private in its report that "there cent for treaty and 10
equity (PE) funding, as against stra- is merit in the represen- per cent for facultative
tegic investors, in insurance sector tation of life reinsurers risks) established the
has paved the way for professional seeking waiver from or- best terms, foreign rein-
promoters. der of preference stipulations, given surance branches (FRBs), Lloyd's India
the consultative and long-term risk and Indian insurers.
IRDAI is expected to notify the final management relationship between The second category will be reinsurers
guidelines on PE in insurance soon. the Life insurer and a reinsurer." The in Special Economic Zones (SEZs), joint
PE investors will be allowed to set up
committee said aviation, life insur- venture partners of Indian insurers,
companies through a special purpose ance, marine hull, large infrastructure reinsurers and other CBRs satisfying
vehicle. However, there will be a 5 projects petrochemical and refinery the eligibility criteria above (including
year lock-in before they can sell their plants, large power plants, oil and en- overseas reinsurance entities of FRBs'
shares.
ergy, specialised/ emerging / volatile parent group).
While most of the insurance compa- risks with high loss potential as well as In another measure aimed at curbing
nies have corporates as promoters retrocession's, rely on international alternative risk transfer (ART), the
with strategic partners, in recent reinsurance market for design of the committee had recommended that
months there have been a few pri- covers, wordings, conditions, capacity, "only structured reinsurance proposals
vate companies with professionals as and support. satisfying risk transfer tests that may
promoters. The recently licensed Insurers and reinsurers require the flex- be prescribed by the IRDAI can be per-
Digit General Insurance is led by ibility to obtain best terms and reinsur- mitted at this juncture".
Kamesh Goyal, former CEO of Bajaj ance support from reinsurers with high The IRDAI "may not allow/ consider
Allianz, in India with Fairfax Group security ratings, it said. "Stipulations of alternative risk transfer instruments
(former stakeholder in ICICI order of preference for reinsurance ces- involving capital markets. Such propos-
Lombard) as partner. Acko General sions can be waived for these classes of als would need discussions and
Insurance is promoted by Varun Dua, business and for such other classes of co-ordination with other capital mar-
who earlier led online insurance bro- business as may be permitted by the ket regulators like RBI and Sebi," it
kerage firm Coverfox. IRDAI from time to time," it said. said.
The Insurance Times, January 2018 7

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