Brokers against preferential biz allocation to GIC

Chennai: IRDAI’s proposal to give GIC the first preference in several areas of business in the reinsurance space has met stiff resistance from insurance brokers who have called for the ‘immediate cancellation and repeal as it is regressive, anti-policyholder and anti-competitive.’

Insurance Brokers’ Association of India (IBAI) has also said reinsurance costs would go up due to limited competition and increase the odds against foreign brokerages trying to make an entry in the Indian market. In a letter to outgoing IRDAI chairman T S Vijayan, the association said that the proposed regulation would act against the interests of cross-border reinsurers. The regulator is yet to finalise reinsurance regulations with discussions still on, said sources. As per draft regulations GIC would get first preference followed by Indian reinsurers and foreign reinsurance branches (FRBs). In the event of all three declining, only then could certain lines of business — such as trade credit, cargo, energy and aviation — go cross-border reinsurers (CBRs). “Such deferential treatment would increase reinsurance costs as it would not be a free or fair competitive market. Cross-border reinsurers will find less incentive to operate in the Indian market if they are handicapped by such rules and are allowed to cover only large property and liability risks,” said an IBAI official.


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