IFSCA Directs IFSC Insurance Offices to Develop Re-Insurance Strategy for Risk Management
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- Last Updated on 18 April, 2023
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Notification No. IFSCA/2022-23/GN/REG036., dated: 11.04.2023
The International Financial Services Centres Authority (IFSCA) has notified the IFSCA (Re-insurance) Regulations, 2023 with the objective of providing a framework for overseeing and controlling the inward and outward arrangements of re-insurance business by IFSC Insurance Offices (IIOs).
Under the new norms, every IIO must develop and document its Re-insurance Strategy and Re-insurance Programme (RSRP), which shall form an integral part of the IIO’s overall underwriting strategy and risk management philosophy. The policies and procedures for selecting and monitoring re-insurance arrangements should be included in the RSRP.
‘Re-insurance’ shall have the same meaning as assigned to it under sub-section (16B) of section 2 of the Insurance Act, 1938. According to section 2(16B) of the Insurance Act, 1938, re-insurance means the insurance of part of one insurer’s risk by another insurer who accepts the risk for a mutually acceptable premium.
Further, every IIO should formulate a segment-wise retention policy duly approved by its Board and should maximise the retention commensurate with its financial strength and quality of risk while ensuring that the re-insurance arrangements are not fronting.
Any IIO may initiate a proposal for the formation of an insurance pool and submit it to the Authority for obtaining prior approval. The Authority, after examining various factors including but not limited to its objectives, basis, capacity for participation, limits of liability and terms and conditions, may permit the formation of an insurance pool. Further, the constitution of the insurance pools and appointment of the administrator of such insurance pool should be in the manner as directed by the Authority.
Also, IFSCA has prescribed the reporting requirements for IIOs. An IIO should furnish information related to inward and outward re-insurance arrangements, as the case may be, to the Authority, in such manner, interval and in such form, as may be specified by the Authority. Various other compliances were prescribed.
Click Here To Read The Full Notification
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