Global reinsurance major Gen Re, which has received a branch licence for India operations, said there still exist a few regulatory hurdles that can be removed for the market to benefit.
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that state-run general insurer GIC Re will have the right of first refusal under which the reinsurer has the first right to accept or refuse any reinsurance contract in the country.
“We are glad that there is something now like a legal form of a branch that did not exist a couple of years ago,” Winfried Heinen, chairman of the executive board of directors, General Reinsurance AG, told The Hindu.
“But to be frank, there are still quite some hurdles that could be removed,” he said.
Gen Re, a member of the Berkshire Hathaway family of companies, has been in the Indian market for the past 15 years through various channels with focus primarily on life and health sector.
Open competition
“I think I am not speaking on behalf of Gen Re alone but for all international reinsurers. Reinsurers do like open competition. The more we diversify, the better we can use our capital,” he said.
“Clearly there is a consensus in the international reinsurance market that minimum protectionism and low legal hurdles will benefit the market,” he said. Gen Re commenced its operations through its branch in India earlier this month.
Major reinsurance firms like Swiss Re, Munich Re, Hannover Re, SCOR and RGA (Reinsurance Group of America) started their branch operations this year.
“Indian reinsurance regulations are evolving. IRDAI has formed a committee to review the existing regulations. This is most welcome,” said Venkatesh N. Chakravarty, Gen Re’s India CEO.
Capital norms
Regarding regulatory mandate of having ₹100 crore initial capital to start branch operations, Mr. Heinen is of the view that branch should not have its own capital since it is part of a larger entity.
“In my opinion, since we are a branch, the branch should not have capital of its own. A branch is part of a much bigger entity,” he said.
“To grow more in India, we have to bring in more capital — which we cannot use anywhere else, and that makes it more expensive to do business in India. This will be reflected in the prices we can offer to our clients, and probably this will again be reflected in the prices they offer to their clients. This inefficiency has a knock-on effect on the customers,” he added.
