Page 50 - India Insurance Report 2023- BIMTECH

38 India Insurance Report - Series II

2.4.Upshot: Reinsurance Market Freeze

The reinsurance costs are naturally higher in India, as a result of highlights presented above that
tend to follow the trail of higher capital charges, local protectionism, cumbersome regulatory and
compliance burdens but little regulatory hand-holding, and higher taxes. However, the market at the
same time continues to be highly price sensitive and competitive. Despite a general buzz around creating
an Ease of doing insurance business framework (there have been six Working Groups formed at the
regulatory level since 2016 to address the pain points), the Indian reinsurance market continues to trudge
along without transformative outcomes. Consequently, the market has also not seen any new FRB
entries since 2018.

3. Developing India as a Global Insurance Centre at Mumbai and a Reinsurance
Hub at IFSC, GIFT City

The Indian insurance/reinsurance markets require a transformative legislative and regulatory agenda
resting on the Vision to promote “Inclusive, fully penetrated insurance” with a firm focus on Providing
Ease of Doing Insurance Business Framework (EoDIBF) and a Single Window Ownership and
Protecting Market Oversight for sustainable and profitable growth of its entities that is valued by all
stakeholders. The EoDIBF requires a legal, regulatory and institutional framework (LRIF) around
Principle-Based Primary Legislations / Strategic approach to set new directions and empowering regulator
with adequate powers / Regulatory Responsibility to promote effective and globally consistent supervision
of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the
benefit and protection of policyholders, and ensuring Fair competition, Level playing field and India
becoming a Global Insurance Centre at Mumbai and a Reinsurance Hub at IFSC, GIFT City.

Besides, Broking, Risk Management, Surveying and Adjusting professions’ Self-Regulatory
Organizations (SROs) must be made to evolve and made responsible for regulating their own body of
professionals, which requires IRDAI commitment and institutional process to allow these SROs to be
independent, yet accountable. The Indian insurance market needs effective dispute-resolution mechanisms.
The Insurance Ombudsman Rules, 2017, need to be improved upon. Developing India as the Global
Insurance Alternative Dispute Resolution (ADR) Hub is fundamental to the protection of policyholders’
interests as Arbitration/Mediation/Conciliation are inexpensive and time efficient in comparison to
litigation. IRDAI needs to ensure that all insurance policy contracts have clauses inserted providing for
ADR mechanisms, with Indian jurisdictional clauses and the seat of ADR settlement being in India.

3.1. Few Required Legislative Changes on Reinsurance

3.1.1. Definition of ‘Reinsurer’

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 are specifically