IRDAI Proposes Reinsurance Order-of-Preference Reform in India

The Insurance Regulatory and Development Authority of India has proposed changes to the rules governing the order of preference under which insurers place their reinsurance business, a move that could alter the longstanding advantage held by state-owned General Insurance Corporation of India. A new exposure draft sets out amendments under consideration that would affect GIC Re's right of first refusal, the arrangement that currently gives the national reinsurer priority access to business ceded by Indian insurers. Industry bodies have welcomed the direction, saying the proposals point toward a more open and balanced reinsurance market. Reinsurance allows primary insurers to transfer part of their risk to other companies, strengthening their capacity to underwrite large or catastrophic exposures, and a more competitive placement framework could give insurers greater choice of partners and pricing. The regulator has separately retained the mandatory obligatory cession, the share of business non-life insurers must place with GIC Re, at 4% for the financial year, and continues to identify GIC Re, Life Insurance Corporation and New India Assurance as domestic systemically important insurers. The consultation reflects a broader effort to modernise India's reinsurance sector and align it with the regulator's goal of deeper, more resilient insurance markets.