Page 51 - Insurance Times JUNE 2022

Circular

IRDAI Circular

Pricing of products covering Fire and Allied Rationalization of compliance require-
perils ments

IRDAI/F&A/CIR/MISC/99/5/2022
IRDAI/NL/CIR/MISC/95/05/2022
Date: 12th May, 2022
Dated: 12th May, 2022
1. Insurance Information Bureau of India has been periodi- (i) Compliance requirements prescribed for the Branches
of the foreign reinsurers under Public Disclosures by
cally publishing the industry Burning Cost for Fire perils
Insurers vide IRDAI circular ref. no. IRDAI/F&A/CIR/
(FLEXA). All insurers have been informed that the purpose
MISC/256/09/2021 dated 30.09.2021 and
of this is to give an indication to insurers of the industry
Burning Cost for various occupancies, for appropriate use (ii) Revised Guidelines on Stewardship Code for Insurers in
India issued vide IRDAI circular ref. no. IRDAI/F&A/GDL/
in the matter of pricing the various risks.
CPM/045/02/2020 dated 07.02.2020.
2. The Authority has been receiving several complaints from
1. The Authority has received representations on the ra-
policyholders, both directly and through various platforms
tionalization of compliance requirements of Foreign
such as industry associations, that insurers are referring
Reinsurance Branches (FRBs) as they are not directly
to the Burning Cost as a ‘mandated minimum rate’.
dealing with the retail customers. Further, represen-
3. The objective of IIBI publishing details of Burning Costs tations have also been received from the non-life indus-
occupancy-wise is only to give information to insurers with try to dispense with the Form NL 40 on disclosure of
Underwriting performance on their respective websites.
regard to industry-level experience for appropriate use
Accordingly, the following requirements on Public Dis-
while rating risks. By no means does this even remotely
closures have been reviewed and modifications have
imply that this is a ‘mandated minimum rate’. It is expected
been made as under:
of insurers to consider all applicable risk factors for rating
2. Publication in News Paper by FRB and Lloyd’s India:
a risk and give appropriate discounts or charge loading as
FRBs and Lloyd’s India provide reinsurance support to
warranted --the rating approach shall be part of the tech-
the direct insurers and the insurers do conduct their due
nical note filed under the Use and File/File and Use proce-
diligence on the FRBs while entering reinsurance con-
dure as the case may be.
tracts with them. The necessary information on
4. It is reiterated that insurers shall ensure that policyhold- financials is also made available through Public Disclo-
ers are not mis-informed that the Burning Cost is a ‘man- sures on the respective website of the FRBs. Reinsur-
dated minimum rate’ for insurers to charge. ance business is B2B segment and the policyholders do
not deal with the Reinsurers.
Please acknowledge this circular.
Accordingly, it has been decided that the FRBs and
(Yegnapriya Bharath)
Lloyd’s India need not publish the half yearly and an-
Chief General Manager (Non-Life)
nual Revenue Account, Profit & Loss Account, Balance
The Insurance Times, June 2022 51