Insurance regulator Irdai on Wednesday allowed foreign reinsurance branches (FRB) and Lloyd’s India to repatriate excess assigned capital with its prior approval, in order to ensure sufficient reinsurance capacity and to attract more reinsurance players. Issuing a circular on repatriation of assigned capital by FRBs and Lloyd’s India, the Insurance Regulatory and Development Authority of India (Irdai) said the request to repatriate the assigned capital shall be submitted by the foreign reinsurers, who are engaged in reinsurance business through a branch in India.
In order to repatriate excess assigned capital, FRBs need a certificate from the foreign reinsurer stating that the reinsurer has net owned funds of Rs 5,000 crore or such amount as prescribed under Section 6 (2) of the Insurance Act, 1938, as per the last audited balance sheet. Minimum assigned capital shall be Rs 100 crore or such higher sum as specified by Irdai at the time of grant of certificate of registration net of provisions as per regulations.
The solvency ratio after the repatriation shall be at least 50 basis points higher than the control level of solvency i.e. 200% as specified by the Irdai, the circular said. “Such withdrawal shall not exceed 20% of assigned capital of such FRB/Lloyd’s India as at the end of last financial year,” the circular said, adding one request in a financial year for repatriation can be made by the foreign reinsurer.
Irdai said it has been taking various steps towards the ease of doing business so that insurance penetration can be increased. Various working groups represented by industry officials were constituted to suggest the changes in the existing regulatory framework and the compliance requirements.
The committees on reinsurance regulations, ease of doing business and developmental topics and the committee on finance and tax recommendations for reinsurance industry gave their recommendations, interalia, on the matters pertaining to repatriation of excess assigned capital by FRBs and Lloyd’s India.
“After careful examination of the recommendations of the working groups, it is noted that to ensure sufficient reinsurance capacity in India and to attract more reinsurance players for offering reinsurance at a competitive price, the free movement of assigned capital for foreign reinsurance branches is required,” the regulator said.