The Indian insurance industry now has ITI Reinsurance as a domestic reinsurance company, apart from General Insurance Corporation of India (GIC Re) which was earlier the sole domestic reinsurer. While GIC Re was given the domestic reinsurer status thereby getting first preference in reinsurance contracts, the regulator is yet to clarify if ITI too will get a similar privilege. ITI Reinsurance is part of Fortune Financial Services, is set to become the first private sector reinsurance company in India. Sun Pharmaceutical ’s Executive Director Sudhir Valia and family control Fortune Financial Services. Valia is also the brother-in-law of Dilip Shanghvi, promoter of Sun Pharma. Till now, GIC Re was the only Indian reinsurance company. It is entitled to the right of first refusal and also has the privilege of cessions which means a portion of risk is to be mandatorily ceded to it by an insurer. The percentage of risk ceded varies from one year to the other. Now with another Indian reinsurer entering the market, it is anticipated that they too would enjoy similar rights. While foreign reinsurers like Swiss Re, Munich Re, SCOR RE, Hannover Re and RGA Life Reinsurance Company of Canada have been given permission to open an Indian branch, existent rules stipulate that Indian reinsurer would get the first preference in any new treaty/contract entered upon. Reinsurance refers to a process wherein an insurance company takes a cover for the risks incurred from insuring an individual, group or property. For larger corporate risks like fire, engineering and aviation, larger size covers are taken. If the risk is too high to be reinsured in India, it is spread across several reinsurers in India and abroad. In India, the reinsurance industry is worth around Rs 18,000 crore. Of this, reinsurance for the life insurance segment constitutes about Rs 1,200 crore. Apart from general insurance where the cession has been fixed at 5 percent (FY17), there is also a proposal for life insurance companies to cede a fixed amount to the Indian reinsurance companies.
