Foreign reinsurers which have a branch licence in India will have to wait longer to get clarity on the right to first preference in reinsurance treaties in India.
The IRDAI, in its board meeting at the end of June, was unable to arrive at a consensus on the matter and is seeking more time for the decision, reports Moneycontrol.
"There have been diverse views on this matter. Hence, any tweaks in the status quo will take time," said a senior official.
Meanwhile, foreign reinsurers have stuck to their demand for equal treatment with their Indian counterpart and are open to knocking government doors to seek a quicker solution. Currently, state-owned reinsurer GIC Re has first right in any reinsurance treaty. Foreign reinsurers have waited for more than 18 months for a clarification from the authorities of the order of preference.
In April 2018, IRDAI asked insurance companies to strictly adhere to the order of preference while ceding reinsurance business. Currently, first preference is given to an Indian reinsurer having a prescribed credit rating, followed by branches of foreign reinsurers.
In November 2017, a reinsurance expert committee constituted by IRDAI had recommended that the order of preference in reinsurance cessions should be: GIC Re and then to other Indian reinsurers, cross-border reinsurers, foreign reinsurance branches, Lloyd’s India and Indian insurers.