Insurance News

Insurers plan digital payments platform for reinsurance business

New Delhi: Insurers are looking to set up a digital payments platform (exchange) for effective management of their reinsurance business, which will facilitate reinsurance premiums, commissions, claims, and any other transactions between the insurer, insurance intermediary and reinsurance companies.

The initiative, led by the General Insurance Council, will also see participation from foreign reinsurers and broker associations.

“The platform will enable transparency and improve the efficiency of financial transactions between reinsurers. It will help streamline the process of reinsurance contract validations, balance confirmations, settlements, and receipts between insurers and reinsurers, which will also reduce administrative burdens,” said Tapan Singhel, chief executive officer, Bajaj Allianz General Insurance.

According to another executive aware of the developments, a new company will be set up towards this end, where general insurance companies through the GI Council will hold up to 46% stake. “No insurance firm will hold more than 6% stake while the developer company may be offered around 24% stake in the new firm,” he said, adding that the process is on to identify all key stakeholders.

Singhel said that the digital platform will reduce the turnaround time for effecting remittances and confirming receipt of funds thereby improving the efficiency of reconciliation between insurers and reinsurers. “The Reinsurance Digital Payment Platform is a platform that will provide a holistic and unified solution for handling all reinsurance-related financial transactions,” he noted.

Last year, the insurance sector regulator, Insurance Regulatory and Development Authority of India (Irdai), had proposed that the maximum overall cession limits allowed per cross-border reinsurer (CBR) by an Indian insurer transacting other than life insurance business shall be 30% (or amount may be specified by the regulator from time to time) of its total reinsurance premium ceded outside India to all CBRs.

“Every Indian reinsurer including foreign reinsurance branches (FRBs) shall maintain a minimum retention within India of 50% of Indian reinsurance business underwritten. Any retrocession to an IIO (IFSC Insurance Office) up to 20% of Indian reinsurance business underwritten shall be reckoned towards the required minimum retention of 50%,” the regulator said in the exposure draft. The amended regulations will be applicable as of April 1, 2023.

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