General insurance businesses are eligible for a rebate from the Insurance Regulatory and Development Authority (IRDA) in exchange for mandated reinsurance through GIC RE. This is a one-percentage-point refund. From January 1, 2023, the new rule will be necessary for GIC RE.
Following this, the government reinsurance company GIC RE (General Insurance Corporation of India Limited) will be required to get reinsured at a rate of 4% of total business instead of 5%. GIC RE will lose up to Rs 2000 crore in premiums as a result of this. For the fiscal year 2023, the necessary GIC RE insurance will be decreased from 5% to 4%.
What is the concept of reinsurance?
Insurance for insurance firms is known as reinsurance. GIC RE was established to cover the reinsurance that General Insurance companies were required to provide. In the previous few years, IRDA has lowered mandatory re-insurance from 20% to 5% in successive years. The regulatory authority also sets commissions in the various reinsurance businesses.
- 5% in Oil & Energy & Motor Third Party,
- 10% in Group Health,
- 7.5% in Crop Insurance, and
- 15% in the rest of the business