IRDAI set norms for Indian Re-insurers by notifying Obligatory Cession for the financial year 2022-23
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- Last Updated on 19 January, 2022
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Notification no. F. No. IRDAI/RI/1/180/2022. Dated: 10.01.2022
The IRDAI notifies Obligatory Cession for the financial year 2022-23. This notification shall be applicable to Indian Re-insurers and other applicable insurers as per the provisions of Section 101A of the Insurance Act, 1938. The percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian Re-insurer(s) shall be 4% in respect of insurance attaching during the financial year beginning from 1st April 2022 to 31st March 2023, except the terrorism premium and premium ceded to the nuclear pool, wherein it would be made ‘NIL’.
There would be no limit on the sum insured applicable for the cessions made during the period from 1st April 2022 to 31st March 2023. IRDA specified different percentages of commission on obligatory cession for different classes of business shall be as follows:
(a) Minimum 5% for Motor TP and Oil & Energy insurance.
(b) Minimum 10% for Group Health insurance.
(c) Minimum 7.50% for Crop Insurance.
(d) Average Terms for Aviation insurance.
(e) Minimum 15% for all other classes of insurance business.
Commission over and above can be mutually agreed upon between Indian Re-insurer(s) and the ceding insurer. IRDA specified that no profit commission will be payable if the loss ratio exceeds 78%. Further, the profit commission shall not exceed 14%.
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