IRDAI has drifted away from its earlier stand pertaining to regulations regarding reinsurance companies. This change might prompt certain global reinsurance companies to rework their strategy to open branches in India..
Earlier, IRDAI had proposed to keep GIC Re at par with its foreign counterparts. However, this was vetoed in the meeting held on November 24 2015 by the government nominee, Alok Tandon, joint secretary in the finance ministry. This move has resulted in IRDAI placing new reinsurance norms that are in favour of GIC Re.
This issue has undergone three revisions now. The first draft was proposed in April 2015 where the IRDAI had proposed that GIC Re should be given preference over foreign reinsurance companies. This faced severe backlash and foreign reinsurers expressed their concerns. Thus, a second draft was proposed in May 2015 in which IRDAI suggested a level playing field. As a result, organisations such as Swiss Re, Munich Re and Scor were interested in opening branches in India. Now that the situation has changed, it has again forced foreign reinsurers to reconsider opening branches in India.
In a recent update, IRDAI also mentioned that GIC Re should get preference in the order of cessions by Indian insurers.