Page 10 - The Insurance Times April 2025

Ë°¼¿¬»

IRDAI retains 'obligatory cession' at 4% for FY26 additional secretary looking after insur-
ance and financial inclusion.
IRDAI has retained the 'obligatory cession' to be placed with state-owned
General Insurance Corporation of India (GIC Re) at 4 per cent for FY26, mark-
ing the third financial year in a row at this level. Insurers gain tools to man-
age volatility and protect
Obligatory cession is the portion of business that Indian non-life insurers must
mandatorily reinsure with GIC Re. returns

"The percentage cession of the sum insured on each general insurance policy IRDAI decision to allow insurers to
to be reinsured with the Indian reinsurer(s) shall be 4 per cent in respect of hedge risks through equity derivatives
insurance attaching during the financial year beginning from April 1 to March will help them manage market volatil-
31, 2026, except the terrorism premium and premium ceded to Nuclear
ity and protect policyholder returns.
pool wherein it would be made 'nil'". IRDAI said. And, there will be no limit
However, this move is unlikely to alter
on sum insured applicable for the cessions made during FY26.
their investment strategies.
Under the current regulatory frame-
Finance Ministry seeks ap- rience and must have worked as sec- work, IRDAI allows insurers to deal in
retary to the Government of India or
plications for IRDAI chief in an equivalent position with the gov- rupee interest rate derivatives in the
The Ministry of Finance has invited ernment with "proven track record of form of forward rate agreements
applications for the post of chairperson leadership and authority in decision (FRAs), interest rate swaps and ex-
change traded interest rate futures
in the IRDAI, as the tenure of the cur- making".
rent chairperson, Debasish Panda, Applicants from the private sector are (IRFs).
ended on March 13. expected to have worked as CEO or in Besides fixed income derivatives, insur-
In its advertisement, the Department an equivalent position in a large finan- ers are also permitted to deal in credit
of Financial Services has sought appli- cial institution. default swaps (CDS) as protection to
cations from individuals with "knowl- The applicant's age should not be more buyers.
edge or experience in life insurance, than 63 years old as on the date of Looking at the increasing trend in in-
general insurance, actuarial science, vacancy - March 14, 2025. The last day vestments in the equity market by in-
finance, economics, law, accountancy, for submitting applications is April 6, surers and owing to volatility in equity
administration or any other discipline, 2025. Panda's tenure commenced on prices, IRDAI felt the need to permit
which would, in the opinion of the Cen- 14 March, 2022. insurers to hedge through equity de-
tral Government be useful to the Au-
Panda is a 1987- batch IAS officer of rivatives. Life insurers typically invest
thority."
the Uttar Pradesh Cadre. Before be- nearly 30-35 per cent of their portfo-
It calls for applications to have a mini- coming IRDAI chairman, he also served lio in the equity market and the re-
mum 30 years of relevant work expe- as the financial services secretary and maining in the fixed income segment.

10 April 2025 The Insurance Times