• Ratings agency Moody’s Investors Service said that the insurance regulation that mandates first justify of refusal to Indian reinsurers is credit positive.
  • The regulations will take effect in January 2019 and are credit positive for the Indian insurance industry because they will improve Indian insurers’ access to a broader reinsurance base, which will support their management of underwriting risk and performance.
  • There is only one domestic re-insurer, GIC Re, in the Indian reinsurance market which is pegged at $6.3-$7 billion.
  • Indian reinsurers will retain the first justify of refusal but are required to simultaneously seek terms from at least four foreign reinsurance branches, according to the new regulations.
  • This will allow non-Indian reinsurers to compete on equal terms with Indian reinsurers.
  • IRDAI’s new reinsurance regulations are another steps to liberalise the reinsurance market and were preceded by admitting foreign-based reinsurers to Indian market.