GIC to partner Hannover Re

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Mumbai, May 8 In a first-of-its-kind alliance, the country’s official reinsurer, GIC Re, is collaborating with Germany’s Hannover Re, one of the top five reinsurance Companies worldwide, to develop life reinsurance in the country. Following the tie-up, to be announced shortly, both GIC Re and Hannover Re will share the business in a 60:40 ratio. The modalities of the alliance are currently being worked upon.

Through reinsurance, a life insurer can be compensated for any claims by policyholders. Currently, 18 life insurance Companies, including Life Insurance Corporation, generate premia of around Rs 1 lakh crore, but the life reinsurance business has remained underdeveloped as GIC Re, which underwrites over Rs 7,000 crore primarily related to general insurance, lacks the expertise to expand the business.

The life reinsurance business, unlike general reinsurance, has not grown in India despite the presence here of the world’s two largest reinsurers, Swiss Re and Munich Re. However, the life insurance market is changing both in quality and quantity with the introduction of more complex products by life insurers.

LIC traditionally reinsures a small component of its business. In 2006-07, Rs 41.67 crore was ceded as reinsurance premium (against Rs 34.54 crore in 2005-06). Similarly, in the case of private insurers, a small component of the business was reinsured, with group business forming the major component of cessions. Private insurers together ceded Rs160.05 crore (against Rs101.62 crore in 2005-06) as premium towards reinsurance.