Page 24 - India Insurance Report 2023- BIMTECH

12 India Insurance Report - Series II

person who carries on a reinsurance business, as currently, there is no distinction between an “insurer”
and a “reinsurer”. Since the primary legislation does not distinguish between an “insurer” and a “reinsurer”,
the IRDAI regulations, too, do not distinguish between “insurers”, “Indian reinsurers” and the “foreign
reinsurance branches” in terms of core characteristics, and the applicability of majority of IRDAI
regulations – though there are protective regulations galore for the “Indian reinsurers” via a vis “foreign
reinsurance branches”. This is the reason, apart from others, that India has been deprived of an ‘Indian
global reinsurance hub’,

For the sake of good order, completeness and legislative accuracy, having a separate definition of
reinsurer would ensure clarity on the applicability of relevant regulations which reinsurers, especially
overseas reinsurance branches, are specifically required to comply with and will thus help in the necessary
distinction which needs to be drawn between different entities. Currently, a majority of the IRDAI
Regulations also apply for reinsurers because reinsurers are considered as insurers.

h. Self-Regulatory Organisations such as Life / General Insurance Councils

The two Insurance Councils – Life and General – are the representative bodies of the Life and
General Insurers, respectively, per Section 64 C of Part II A of the Insurance (Amendments) Act, 2015.
One of the functions of the Executive Committees of the two Councils – Life and General – per Section
64 J and L is “to aid and advise insurers, carrying on Life/General insurance business, in the matter of
setting up standards of conduct and sound practice and in the matter of rendering efficient service to the
holder of policies of Life/General insurance”.
Aided by the Insurance Act provisions, the Councils must be enabled by the IRDAI to become
genuine SROs for the insurers, of the insurers, and by the insurers (this will also require amendments to
the Insurance (Amendments) Act, 2015) with sound and globally benchmarked insurance practices and
“standards of conduct”. The Life and General Insurance Councils need to be ‘nudged’ to take over all
“standards of conduct” functions from the IRDAI in the matter of ‘underwriting management’, and
transform themselves into a credible and profitable service provider. Such bodies should be driven by
the members of the insurance fraternity and should not have representatives from the Central government
lest they lose their character as the SROs.
A separate Reinsurance Council be formed to represent issues/concerns of Reinsurers/FRB’s /
Lloyd’s India. The current GI Council constitutes of GI and Stand-Alone Health insurance Companies
in addition to the reinsurance representation, and hence, the agendas taken up are more specific to the
direct insurance market and the challenges faced by the GI companies. This often leads to a conflict with
the agenda of the reinsurance branches/ Lloyd’s and the reinsurance industry in general. Hence, it is
suggested to have a Reinsurers Forum as a separate Council. This will enable reinsurers/FRBs/Lloyd’s
to have a better representation of the topics to be discussed and make an external representation to
various other Statutory Bodies, including ease of resolution of all queries. The separate reinsurance
council will help to discuss international reinsurance practices for the development of the insurance
sector in India. The Reinsurance council can also act as a platform to promote and represent the Indian
Reinsurance industry to the international audience.