GIC not keen to continue with 10% compulsory biz from local insurers
The company during 2012-13 has also decided to be cautious in taking up overseas reinsurance business in the wake of huge losses triggered by natural calamities across the globe. “The company is not in favour of continuing the 10 per cent compulsory cession of all reinsurance deals in the country as there are certain issues involved in pricing post de-tariffing of general insurance market,” a senior insurance sector official said.
GIC receives statutory cession of 10 per cent from each general insurer. Although this brings in an assured income for the national reinsurer, it has also to pay the claims in equal proportion.
The fact that Indian general insurers are bleeding heavily with underwriting losses, such 10 per cent obligatory business has become a liability for GIC. In fact, the segment regulator was expected to phase out such an arrangement, which hasn’t been done so far.
“After a host of natural calamities like floods in Thailand, tsunami in Japan and earthquake in New Zealand, whose insurance losses have dented GIC Re’s balance sheet, the company has gone very cautious about the overseas reinsurance business,” said an industry source who didn’t want to be named. GIC Re had posted a loss of Rs 2,468 crore in fiscal 2012. Its loss from fire insurance was Rs
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