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IRDAI to expand reinsurance market, overhauls regulations

India’s Insurance regulator, IRDAI has approved a wide-ranging overhaul of reinsurance regulations aimed at promoting a favourable business environment and inviting more reinsurers to set up business operations in India, to position India as a global reinsurance hub.

As per IRDAI, it recently approved amendments to the Reinsurance Regulations during its 123rd Authority Meeting, to harmonise and streamline existing regulations that apply to Indian insurers, Indian reinsurers, Foreign Reinsurance Branches (FRBs), and International Financial Services Centre Insurance Offices (IIOs).

The key focus areas are:
1. Increase reinsurance sector’s overall capacity to handle growing demand and manage larger risks.
2. Enhance industry’s technical expertise for encouraging excellence and innovation.
3. Reduce the compliance burden on various entities.
4. Minimum capital requirement for FRBs lowered from INR 1 Bn ($ 12.1 Mn) to INR 500 Mn, with the provision to repatriate any excess assigned capital.
5. Order of preference, previously at 6 levels, has been streamlined to 4 levels.
6. Simplified format for reinsurance programmes and rationalisation of regulatory reporting requirements.

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