Executive Summary:
This notification, issued by the Insurance Regulatory and Development Authority of India (IRDAI), concerns obligatory cessions for the financial year 2020-21. It outlines the percentage of sum insured on general insurance policies to be reinsured with Indian Reinsurers, specifically setting it at 5%, excluding terrorism and nuclear pool premiums which are set to NIL. It specifies terms and conditions, including commissions and profit sharing, applicable from April 1, 2020, to March 31, 2021.
Key Points / Main Content:
* **Applicability**:
* Applies to Indian Reinsurers and other applicable insurers as per Section 101A of the Insurance Act, 1938.
* **Percentage of Cession**:
* 5% of the sum insured on each General Insurance Policy to be reinsured with Indian Reinsurers.
* Exemption: Terrorism premium and premium ceded to Nuclear pool are NIL.
* Placement: Entire Obligatory Cession to be placed with General Insurance Corporation of India (GIC Re) only.
* **Terms and Conditions**:
* No limit on the sum insured applicable for cessions made from April 1, 2020, to March 31, 2021.
* Indian Reinsurer may require immediate notice of underwriting information for any cession exceeding a specified amount.
* Ceding insurer must inform the Indian Reinsurer whenever the cession exceeds specified limits.
* **Commission**:
* Minimum commission percentages for obligatory cessions:
* 5% for Motor TP and Oil Energy Insurance.
* 10% for Group Health Insurance.
* 7.50% for Crop Insurance.
* Average Terms for Aviation Insurance.
* 15% for all other classes of Insurance business.
* Commission over and above can be mutually agreed upon.
* **Profit Commission**:
* Indian Reinsurer to share profit commission on a 50:50 basis with the ceding insurer.
* Based on the performance and surplus of the total obligatory portfolio.
* Factoring:
* Incurred loss at the end of 3 financial years.
* Management Expenses at 2.
* Profit at 5.
* Commission at 15.
* Loss ratio at 50 to 78.
* No profit commission if the loss ratio exceeds 78.
* Profit commission shall not exceed 14.
Impact Analysis:
Indian Reinsurers:
Impact: Must accept obligatory cessions at the specified percentage and terms. They need to establish a mechanism for immediate notice of underwriting information for cessions exceeding specified amounts.
Action Required: Define and communicate the specified amount for immediate notice of underwriting information to ceding insurers. Share profit commission as defined.
Other Applicable Insurers (Ceding Insurers):
Impact: Required to cede 5% of the sum insured on each General Insurance Policy (excluding terrorism and nuclear) to GIC Re. Need to provide immediate notice of underwriting information for cessions exceeding amounts specified by the Indian Reinsurer.
Action Required: Implement processes to ensure compliance with the obligatory cession requirements. Inform the Indian Reinsurer whenever the cession exceeds specified limits.
Key Entities Referenced
Insurance Regulatory and Development Authority of India: The regulatory body that issued the notification regarding obligatory cession.
Insurance Act, 1938: The primary legislation under which the notification regarding obligatory cession is issued, specifically referring to Section 101A and 101B.
Central Government: The government body that provided previous approval for the notification.
Indian Reinsurers: Entities to which the obligatory cession applies.
General Insurance Corporation of India (GIC Re): The entity with which the entire obligatory cession is to be placed.
Advisory Committee: Committee consulted under section 101B of the Insurance Act, 1938.
New Delhi: Location where gazette was published, New Delhi, Delhi
Dr. Subhash C. Khuntia: Chairman of Insurance Regulatory and Development Authority of India.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. NO. D. L.-33004/99
सी.जी.-ए.पी.-अ.-07022020-216023
xxxGIDHxxx
CG-AP-E-07022020-216023
xxxGIDExxx
असाधारण
EXTRAORDINARY
भाग III—खण् ड 4
PART III—Section 4
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 47] नई कदल्ली, बुधिार, फरिरी 5, 2020/माघ 16, 1941
No. 47] NEW DELHI, WEDNESDAY, FEBRUARY 5, 2020/MAGHA 16, 1941
भारतीय बीमा जिजनयामक और जिकास प्राजधकरण
अजधसचू ना
हदै राबाद, 3 फरिरी, 2020
फा.स.ं भा.बी.जि.जि.प्रा./आरआई/1/167/2020.—बीमा अजधजनयम, 1938 की धारा 101ए की
उप-धारा (2) एि ं (4) द्वारा प्रदत्त िजियों का प्रयोग करत े हुए, प्राजधकरण, बीमा अजधजनयम, 1938 की धारा
101बी के अधीन गठित सलाहकार सजमजत के साथ परामि श करन े के बाद और केन्द्र सरकार के पूि-श अनुमोदन स े
जनम्नजलजखत अजधसूचना अथाशत-् - “जित्तीय िर्श 2020-21 के जलए अजनिाय श अध्यपशण” िारी करता ह।ै
1. प्रयोज्यतााः यह अजधसूचना बीमा अजधजनयम, 1938 की धारा 101ए के उपबंध के अनुसार भारतीय
पुनबीमाकताशओं और अन्द्य प्रयोज्य बीमाकताशओं पर लाग ू होगी।
2. अध्यपणश का प्रजतिताः भारतीय पुनबीमाकता(श ओं) के पास पुनबीमा की िाने िाली प्रत्यके साधारण बीमा
पाजलसी पर बीजमत राजि का प्रजतित अध्यपणश 1 अप्रैल 2020 स े प्रारंभ होन े िाले 31 माचश 2021 तक के जित्तीय
िर्श के दौरान संबद्ध ककय े िान े िाले बीम े के संबंध म ें 5% (पााँच प्रजतित) होगा। आतंकिाद प्रीजमयम और नाजभकीय
समूह (न्द्यूजललयर पलू ) को अध्यर्पपत प्रीजमयम इसके अपिाद होंग,े जिनम ें यह ‘िून्द्य’ ककया िाएगा। कुल अजनिाय श
अध्यपणश केिल भारतीय साधारण बीमा जनगम (िीआईसी आरई) के पास ही रखा िाना चाजहए।
3. ित ें :
(क) अध्यपणश के बारे म ेंसचू नााः
i. बीजमत राजि की कोई भी सीमा 1 अप्रैल 2020 स े 31 माच श2021 तक की अिजध के दौरान ककय े गय े
अध्यपणश ों के जलए लाग ू नहीं होगी।
731 GI/2020 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4]
ii. उपयुशि को ध्यान म ें रखत े हुए भारतीय पुनबीमाकताश अध्यपशक बीमाकता श स े अपेक्षा कर सकता ह ै कक
िह भारतीय पनु बीमाकता श द्वारा जिजनर्ददष्ट राजि स े अजधक ककसी भी अध्यपशण की िोजखम-अंकन
सूचना की िानकारी तत्काल द।े िब भी अध्यपशण ऐसी जिजनर्ददष्ट सीमाओं स े अजधक हो िाता ह ै तब
हर समय अध्यपशक बीमाकता श भारतीय पुनबीमाकताश को सूजचत करेगा।
(ख) कमीिनाः
व्यिसाय की जिजभन्न श्रेजणयों के जलए अजनिाय श अध्यपणश पर कमीिन का प्रजतित जनम्नानुसार होगााः
i. मोटर टीपी तथा तले और ऊिाश बीमा के जलए न्द्यूनतम 5%।
ii. सामूजहक स्ट्िास्ट््य बीमा के जलए न्द्यूनतम 10%।
iii. फ़सल बीमा के जलए न्द्यनू तम 7.50%।
iv. जिमानन बीमा के जलए औसत ितें।
v. बीमा व्यिसाय की सभी अन्द्य श्रेजणयों के जलए न्द्यनू तम 15%।
उपयुशि स े अजधक कमीिन भारतीय पुनबीमाकताश(ओं) और अध्यपशक बीमाकता श के बीच पारस्ट्पठरक तौर पर
सहमत रूप म ें हो सकता ह।ै
(ग) लाभ कमीिनाः
भारतीय पुनबीमाकताश जनम्नजलजखत के फैलटररग के बाद कायशजनष्पादन और अध्यपशक बीमाकता श के कुल
अजनिाय श संजिभाग के आजधलय के आधार पर अध्यपशक बीमाकता श के साथ 50% : 50% आधार पर लाभ कमीिन का
साझा करेगा।
i. उपगत हाजन % (3 जित्तीय िर्ों के अंत म ेंगणना करनी चाजहए)
ii. 2% प्रबंधन व्यय।
iii. 5% लाभ।
iv. 15% कमीिन।
v. 50% स े 78% तक हाजन अनुपात।
कोई लाभ कमीिन दये नहीं ह ैयकद हाजन अनुपात 78% स े अजधक हो। लाभ कमीिन 14% स े अजधक नहीं
होगा।
डॉ. सुभार् सी. खुंठटआ, अध्यक्ष
[जिज्ञापन.III/4/असा./434/19]
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, the 3rd February, 2020
F. No. IRDAI/RI/1/167/2020.—In exercise of the powers conferred by Sub-section (2) and (4) of the
Section 101A of the Insurance Act, 1938, the Authority, after consultation with the Advisory Committee,
constituted under section 101B of the Insurance Act, 1938 and with the previous approval of the Central
Government, hereby makes the following notification namely:- “Obligatory Cession for the financial year 2020-
21”.
1. Applicability: This notification shall be applicable to Indian Re-insurers and other applicable insurers as
per the provisions of Section 101A of the Insurance Act, 1938.भाग III खण् ड भारत का रािपत्र : असाधारण 3
2. Percentage of Cession: The percentage cession of the sum insured on each General Insurance Policy to be
reinsured with the Indian Re-insurer(s) shall be 5% (five percent) in respect of insurance attaching during
the financial year beginning from 1st April, 2020 to 31st March, 2021, except the terrorism premium and
premium ceded to Nuclear pool, wherein it would be made „NIL‟. The entire Obligatory Cession is to be
placed with General Insurance Corporation of India (GIC Re) only.
3. Terms & Conditions:
(a) Notice of information on cession:
(i) There would be no limit on sum insured applicable for the cessions made during the period from
1st April, 2020 to 31st March, 2021.
(ii) In view of the above, the Indian Re-insurer may require the ceding insurer to give immediate
notice of underwriting information of any cession exceeding an amount as specified by the former.
The ceding insurer shall inform the Indian Re-insurer at all times whenever the cession exceeds
such specified limits.
(b) Commission:
Percentage of commission on obligatory cession for different classes of business shall be as follows:
(i) Minimum 5% for Motor TP and Oil & Energy Insurance.
(ii) Minimum 10% for Group Health Insurance.
(iii) Minimum 7.50% for Crop Insurance.
(iv) Average Terms for Aviation Insurance.
(v) Minimum 15% for all other classes of Insurance business.
Commission over and above, can be as mutually agreed between Indian Re-insurer(s) and the ceding
insurer.
b) Profit Commission:
The Indian Re-insurer shall share the profit commission, on 50%:50% basis, with the ceding insurer
based on the performance and surplus of the total obligatory portfolio of the ceding insurer, after
factoring the following:
(i) Incurred loss % (to be worked at the end of 3 financial years).
(ii) Management Expenses at 2%.
(iii) Profit at 5%.
(iv) Commission at 15%.
(v) Loss ratio at 50% to 78%.
No profit commission is payable if the loss ratio exceeds 78%. Profit commission shall not
exceed 14%.
Dr. SUBHASH C. KHUNTIA, Chairman
[ADVT.-III/4/Exty./434/19]
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.