Page 13 - Insurance Times December 2015 SAMPLE
P. 13
New reinsurers requires Rs.100 cr capital for settling Banks to face conse-
in India quences for Mis-selling
IRDAI has set a capital requirement of The IRDAI will obtain all relevant infor- policies
Rs.100 crore for allowing new mation before granting an approval
reinsurers to set up operations in India. and satisfy itself that the assets of the Banks will from now on now be held
Currently, public sector GIC is the only branch offices are adequate to meet accountable for mis-selling insurance
reinsurance company directly operat- their liabilities. In addition, the repa- policies for the first time since they
ing in the country. triation of surplus will comply with the began selling in 2002. The bank and
the specific employee found guilty of
The IRDAI has made other requirement of mis-selling of insurance products will
provision for two cat- RBI and FEMA. face consequences under the new In-
egories of reinsurers surance act.
who will be allowed to Furthermore, the glo-
open office in the coun- bal reinsurer has to The Insurance Regulatory and Devel-
try. Under Category 1 a make a firm commit- opment Authority of India has di-
branch office has to maintain a mini- ment to appoint in its rected banks to map policies sold by
mum retention of 50 per cent of the branch office in India, their employees and maintain
Indian reinsurance business. sufficiently skilled staff to underwrite records which is accessible in case of
specialized classes of business and that any complaint.
Under Category II, reinsurers will have the underwriting of Indian business will
to maintain a minimum retention of 30 take place at the Indian branch. The new law defines corporate
per cent of the Indian reinsurance busi- agents as inter-
ness. Any foreign reinsurer who has a rep- mediaries, repre-
resentative office in India and is senting the cus-
The new reinsurers will have to com- granted certificate of registration to tomer, "… they
mence its business within 12 months function as a branch office, has to close have to act in the
from the date of registration. The regu- the representative office within six best interest of
lator will take a decision on the num- months of grant of next licence. The the customer,"
ber of reinsurers that will be permit- net owned fund of the applicant should
ted to set up branches in a year. not be less that the prescribed amount IRDAI chief T. S. Vijayan said. Earlier,
of Rs.5,000 crore at any time. banks were reckoned as agents and
representatives of the insurance
Irda Offers 50% Concession on Reinsurance to PM’s company.
Scheme Under the new law the IRDAI chair-
man said,"the policy and whoever is
The insurance regulator has offered quired rates, it may still not make the sourcing it will be mapped in the
50% concession on reinsurance to the scheme financially viable in absolute records of the corporate agent".
Pradhan Mantri Jeevan Jyoti Bima terms, which will ultimately depend on While the database will be main-
Yojana (PMJJBY) scheme, which of- tained by the bank, IRDAI will be
fers Rs. 2 lakh life cover for Rs. 330 the quality of the underlying provided with the credential so that
a year, providing some re- portfolio,” Anup Rau, chief it can remotely log in and inspect the
spite to life insurers. Insurers executive officer at Reliance records anytime.
lauded the Insurance Regu- Life Insurance said.
latory and Development Au- The insurance regulator will also
thority of India’s (Irdai’s) decision to Life insurers have been de- come out with regulation on corpo-
offer a rebate on reinsurance rate, but manding concession on reinsurance rate governance. These norms will
they still remain skeptical about the vi- ever since the Pradhan Mantri Jeevan define management control so that
ability of the scheme that hit the mar- Jyoti Bima Yojana (PMJJBY) scheme hit insurance companies can meet the
ket in early May. the market. According to their calcula- statutory requirement that the man-
tions, they would get just about Rs. 248 agement is 'Indian'. The new Act also
“While this (Irda move) will improve the out of Rs. 330 paid as premium annu- allows foreign reinsurance compa-
financial position for insurers compared ally. Irdai has allowed reinsurance on a nies to set up branches in India.
to what it was, assuming they are able quota-sharing basis for the scheme. This
to reinsure 50% of the book at the re- means that insurers can now reinsure
50% of the risk they underwrite.
The Insurance Times, December 2015 9
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