The reduction in capital requirements for foreign reinsurance branches (FRBs) under the latest Insurance Amendment Bill is expected to attract more overseas players into India’s ₹98,000-crore reinsurance market. This may potentially intensify competition and further erode the market share of state-owned General Insurance Corporation of India (GIC Re).
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 has lowered entry barriers for foreign reinsurers by cutting the Net Owned Funds (NOF) requirement sharply to ₹1,000 crore from ₹5,000 crore. The Bill has been passed by both Houses of Parliament, paving the way for the implementation of the Insurance Act, 2025.
Regulatory Parity
“The steep reduction in the net owned fund requirement will create a level playing field for FRBs in mainland India as compared to IFSC,” said Prateek Singhal, Executive President & Head of Reinsurance, Howden India.
India currently has 10 FRBs and over 10 reinsurers registered in GIFT City, with more than 15 in the process of registration. “Even with conservative estimates, we will have over 25 reinsurers by the end of next year, making the Indian reinsurance market more dynamic and competitive,” Singhal added.
The ₹1,000-crore NOF requirement already applies to GIFT City entities, and the latest amendment brings regulatory parity between domestic reinsurance branches and those operating out of the IFSC.
The development comes at a time when foreign reinsurers have been steadily gaining market share at the expense of GIC Re. Four of the top five reinsurers in India—Munich Re, Swiss Re, Lloyd’s and SCOR—are foreign majors. Along with GIC Re, they together account for 95.4% of the Indian reinsurance market.
The combined share of these foreign players rose to 49% in FY25 from 25.8% in FY19, while GIC Re’s market share has slipped from over 74% to less than 51%. According to GlobalData, overseas reinsurers are on track to cross the 50% mark in gross written premium terms in FY26.
Competition is also expected to intensify with the proposed domestic reinsurance joint venture between Jio Financial Services and Allianz. In July, Jio Financial and Allianz Group, through its wholly owned subsidiary Allianz Europe B.V., entered into a binding agreement to set up a 50:50 reinsurance JV.
“The entry of Allianz is expected to increase the competitiveness of the Indian reinsurance market. This will impact the market share of GIC Re and other foreign reinsurers operating in India,” said Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, earlier.
Shifting Market Dynamics
However, Hari Radhakrishnan, Expert, Insurance Brokers Association of India, said the reduction in NOF requirements alone should not be overinterpreted. “This is not going to be the only determinant of more branches being opened in India,” he said, adding that reinsurers are drawn to India more by macroeconomic conditions and growth potential than capital norms.
Currently, non-life insurers are mandated to cede 4% of their premiums across segments such as motor, health, fire and marine to GIC Re. This obligatory cession has long been criticised by insurers, who argue it constrains flexibility and earnings. Despite industry demands, the Irdai has retained the 4% cession for FY26, marking the third consecutive year without a revision.
Industry players believe the entry of more reinsurers will increase competitive pressure and could prompt the regulator to revisit the obligatory cession, potentially impacting GIC Re’s financials. In FY25, GIC Re reported domestic premiums of ₹30,662.44 crore, with obligatory business accounting for about 43% of its domestic portfolio.
Radhakrishnan said some erosion in GIC Re’s market share is likely, but added that the insurer has scope to offset domestic pressures through overseas diversification. “GIC operates in foreign markets and has a significant share of 20% of its total business coming from overseas,” he said.