Page 9 - Insurance Times March 2019

IRDAI asks insurers to di- Foreign reinsurers garnered over Rs. 6,200-cr premium
versify risks to avoid re- in 2017-18: IRDAI

peat of IL&FS Foreign reinsurance companies have generated Rs 6,216 crore premium in 2017-
18. During the year 2017-18, foreign reinsurance
IRDAI has advised insurance compa- branches infused assigned capital of Rs 1,452.54
nies to think about mitigating their crore, IRDAI said. Swiss Re has the largest share
risks by not concentrating their in- of Rs 2,047 crore, while Munich based Munich Re
vestment in a few entities. The regu- and Paris-based SCOR SE have reported Rs 1,307
lator also said insurers need to diver- crore and Rs 1,186 crore of premium, respectively.
sify their investment strategies so
the risks faced by them are multi- Foreign reinsurers had recently asked the IRDAI to
dimensional. scrap the practice of giving first preference to public sector GIC Re for any re-
insurance contract. Three out of nine foreign reinsurance branches in India have
"Insurance firms will have to think already reported profit after tax, while the remaining six have reported loss in
how they will mitigate their own 2017-18.
risks also and must diversify. If they
concentrate all risks in a few entities Swiss Re has reported a profit after tax of Rs 60.96 crore, while Axa France and
then they will be in trouble," Irdai Lloyd's have reported a profit after tax of Rs 7.67 crore and Rs 1.69 crore, re-
chairman Subhash Khuntia Khuntia. spectively. Overall, total losses of all nine foreign reinsurance branches were
Khuntia had recently said insurers Rs 323.03 crore.
having exposure to IL&FS, which has As many as ten global players including Hannover Re, RGA, Warren Buffet-owned
a debt of over Rs 94,000 crore, Gen Re and Catlin have set up their branch operations in the country, in the
should make provision and not to wake of numerous regulatory changes in the recent past.
write them off. The latest player to enter the Indian reinsurance market is Allianz, which has
Many insurers and mutual funds got a licence through its arm Allianz Global Corporate & Specialty (AGCS). FM
have exposure to the debt instru- Re (Factory Mutual Reinsurance) of the US has applied for a license to set up
ments of the crippled IL&FS group its operations in the country.
which was taken over by the govern- Meanwhile, MS Amlin, the first Lloyd's syndicate which had set up its opera-
ment last October and the national tion at Lloyd's India platform in India, has exited it. The company's exit from
insurer LIC owns the maximum stake the Indian market is part of restructuring of its global operations focusing on
in the crippled company with 25.34 cost and synergy, said a source.
percent shares. Noting that the in-
surance industry is basically for risk IRDAI to Tweak Capital Requirements Norms for Insur-
mitigation and risk management, it
needs to think about both the liabil- ance Companies
ity as well as investment sides as Insurance sector regulator IRDAI was in the process of tweaking the capital
well since most of them are long- requirements norms for insurance companies, an official said Thursday.
term investors. "In India the capital requirement at present is Rs 100 crore, which is quite high

Speaking about the risks related to as compared to advanced nations", Nilesh Sathe, Member (Life), Insurance
calamities arising due to climate Regulatory Development Authority of India (IRDAI) said.
change, Khuntia said, "for most insur- By 2021 or 2022, this amount would be changed so that many aspirants could
ers, there is investment risk involved join the insurance sector, he told reporters.
and so they have to find ways to do
innovative risk transfers. "There are These firms also did not need to offer a plethora of products but could stick to
many methods like risk pooling and select ones, he viewed.
securitisation of climate risk liabilities Sathe also said he was in line with the banking sector requirements to bring
through instruments like catastrophe down promoters' capital leading to listing of the insurance firms.
bonds. We need to deliberate on a According to him, term policies in India were driven by the private sector un-
much larger scale because climate like the LIC, adding India still provided big scope for insurance penetration and
change is real," he said. increase in density of insured persons.

The Insurance Times, March 2019 9