Reinsurance After Liberalization Analysis
Reinsurance after Liberalization:
As a part of the process of liberalization of the insurance industry in India, the Indian Regulatory and Development of India (IRDA) was given the authority of regulating and controlling the conduct of insurance business in India. IRDA frames rules and regulations for various aspects of the Insurance business including reinsurance. Each insurer in India is free to structure his annual reinsurance program in compliance with regulation and solvency requirement. The program needs to be approved by the IRDA. Besides having GIC Re as the only reinsurer in India, as Indian government had restricted the direct entry of foreign reinsurers, some of the companies were working by having joint venture like Munich Re, Swiss Re, Insurance group of America, Buffett’s Berkshire Hathaway through an agent with Bajaj Allianz to India (Berkshire stopped broking biz in 2013). GIC Re has diversified its operations and is …show more content…
Hence the concept of forming pools came into market and GIC Re started working as the sole pool administrator in India.
• Motor commercial vehicle third party pool was first introduced with effect from 2007. In Dec 2011, that pool was dismantled by IRDA. Motor declined risk pool was introduced in April 2012 and it stayed active up to 2015. With effect from April 2016, declined risk pool was also dismantled by IRDA.
• With a rise in global terror incidents, terrorism pool was first introduced in 2002. Many times, big terrorism risks are ceded facultatively to overseas market without utilizing the domestic pool capacity. So Indian insurers have marked a threshold of loss limit above which the risk is considered as standalone terrorism policy and below which the risk is taken care by domestic
As a part of the process of liberalization of the insurance industry in India, the Indian Regulatory and Development of India (IRDA) was given the authority of regulating and controlling the conduct of insurance business in India. IRDA frames rules and regulations for various aspects of the Insurance business including reinsurance. Each insurer in India is free to structure his annual reinsurance program in compliance with regulation and solvency requirement. The program needs to be approved by the IRDA. Besides having GIC Re as the only reinsurer in India, as Indian government had restricted the direct entry of foreign reinsurers, some of the companies were working by having joint venture like Munich Re, Swiss Re, Insurance group of America, Buffett’s Berkshire Hathaway through an agent with Bajaj Allianz to India (Berkshire stopped broking biz in 2013). GIC Re has diversified its operations and is …show more content…
Hence the concept of forming pools came into market and GIC Re started working as the sole pool administrator in India.
• Motor commercial vehicle third party pool was first introduced with effect from 2007. In Dec 2011, that pool was dismantled by IRDA. Motor declined risk pool was introduced in April 2012 and it stayed active up to 2015. With effect from April 2016, declined risk pool was also dismantled by IRDA.
• With a rise in global terror incidents, terrorism pool was first introduced in 2002. Many times, big terrorism risks are ceded facultatively to overseas market without utilizing the domestic pool capacity. So Indian insurers have marked a threshold of loss limit above which the risk is considered as standalone terrorism policy and below which the risk is taken care by domestic