Page 5 - Insurance Times March 2022

General Insurance

News

Obligatory cession to GIC financial year starting April 1, 2022, till notice of underwriting information of
March 31, 2023, except the terrorism any cession exceeding an amount as
Re cut to 4% from FY23 premium and premium ceded to specified by the former. The ceding
IRDAI has reduced the percentage of Nuclear Pool, wherein it would be insurer has to inform the GIC Re at all
obligatory cession from the domestic made 'nil'," the IRDAI said. times whenever the cession exceeds
general insurance industry for state- such specified limits, IRDAI said.
owned GIC Re to four per cent from The entire obligatory cession has to be
reinsured with GIC Re, IRDAI said. The percentage of commission on
five per cent.
The reduction of just one per cent obligatory cession for different classes
Obligatory cession refers to the part of of business will be: minimum five per
the business that general insurance obligatory cession would not make any cent for motor third party and oil &
companies have to mandatorily cede difference to GIC Re as the overall energy insurance, minimum 10 per
to the national reinsurer GIC Re. general industry pie is growing every cent for group health insurance, mini-
year. "Despite GIC Re having a man-
The size of the Indian general insur- datory obligatory cession, foreign mum 7.50 per cent for crop insurance
ance market was over Rs 2 lakh crore reinsurers including Munich Re, Swiss and average terms for aviation insur-
in 2020-21. It has been growing at Re, SCOR and Allianz have been grow- ance, minimum 15 per cent for all
over 15 per cent in recent years except ing their market shares in India effi- other classes of insurance business.
for the last two years when it has ciently," said an analyst.
faced many challenges due to Covid-19 ICICI Lombard posts mar-
pandemic and has grown within 10 per To begin with, obligatory cession was
10 per cent which was reduced to five ginal rise in net profit in
cent single digit. The approximate size
of the Indian reinsurance market is per cent afterwards and the foreign Q3
around Rs 55,000 crore in FY2020-21. reinsurers which are having branches The country's largest private sector
in India are demanding the total re-
The new quantum of obligatory ces- moval of the obligatory cession for GIC general insurer, ICICI Lombard General
sion, that will be effective from April Re to create a level playing field in the Insurance, has reported a marginal
1, 2022 has been notified by the gov- Indian reinsurance market. 1.28 per cent increase in net profit to
ernment. Domestic general insurers Rs 318 crore in the October-December
will have to cede 4 per cent of their There are currently 10 global quarter (Q3FY22), missing street esti-
premium to GIC Re on every general reinsurers which have set up branch mates. Analysts at Bloomberg had es-
insurance policy they sell during next operations in India for the last three timated a net profit of Rs 402.50
financial year. years. crore. Sequentially, the net profit was
down 29 per cent.
"The percentage cession of the sum There would be no limit on sum insured
insured on each general insurance applicable for the cessions made dur- It's gross direct premium income rose
policy to be reinsured with the Indian ing the period from April 1, 2022 to 16 per cent to Rs 4,699 crore in the
reinsurer(s) shall be 4 per cent in re- March 31, 2023. GIC Re may require reporting quarter as against Rs 4,034
spect of insurance attaching during the the ceding insurer to give immediate crore in the corresponding period of
The Insurance Times, March 2022 5