Until GIC was notified as a National Reinsurer, it was operating as a holding / parent company of the 4 public sector companies, controlling their reinsurance programmes. GIC would receive 20% obligatory cession of each policy written in India. Since deregulation, GIC has assumed the role of the market’s only professional re-insurer. In order to focus on reinsurance, both in India and through its overseas offices and trading partners, GIC has divested itself of any direct business that it wrote prior to November 2000, with the temporary exception of crop insurance. It currently manages Hull Pool on behalf of the market, which receives a cession from writing companies and after a pool protection the business is retro-ceded back to the member companies. GIC also manages the “Terrorism Pool”. 12
The placement of reinsurance business from tbe Indian market is now governed by Reinsurance Regulations formed by the IRDA. The objective of the regulation is to maximize the retention of premiums within the country and to ensure that IRDA has issued the following instructions: • Placement of 20% of each policy with National Re subject to a monetary limit for each risk for some classes • Inter-company cession between four public sector companies. • Indian Pool for Hull managed by GIC. • The treaty and balance risk after automatic capacity are to be first offered to other insurance companies in the market before offering it to international re-insurers. • Each company is free to arrange its own reinsurance program, which has to be submitted to the IRDA 45 days before commencement.
• Not more than 10% of reinsurance premium to be placed with one re-insurer.
• No re-insurer will have a rating of less than ‘BBB’ from Standard and Poor’s or an equivalent rating from AM Best.
General Insurance Corporation of India
GIC as a national re-insurer is providing useful capacity to all insurance companies.
Break-up of Net...