Page 40 - Life Insurance Today January 2018

Insurance Regulatory

and Development

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

40 January 2018 Life Insurance Today

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