**Executive Summary**
This notification from the Insurance Regulatory and Development Authority of India (IRDAI) outlines the obligatory cession requirements for the financial year 2021-22. It specifies the percentage of sum insured to be reinsured with Indian Re-insurer(s) and the commission and profit commission terms. It is applicable from April 1, 2021, to March 31, 2022.
**Key Points / Main Content**
* **Applicability:**
* Applies to Indian Re-insurers 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 must be reinsured with Indian Re-insurer(s).
* Effective from April 1, 2021, to March 31, 2022.
* Excludes terrorism premium and premium ceded to Nuclear Pool, which will be ‘NIL’.
* The entire Obligatory Cession is to be placed with General Insurance Corporation of India (GIC Re) only.
* **Terms & Conditions:**
* There is no limit on sum insured applicable for the cessions made during the period from 1st April 2021 to 31st March, 2022.
* Indian Re-insurer may require immediate notice of underwriting information of any cession exceeding a specified amount.
* **Commission:**
* Minimum commission percentages for different classes of business:
* Motor TP and Oil & Energy insurance: 5%
* Group Health insurance: 10%
* Crop Insurance: 7.50%
* Aviation insurance: Average Terms
* All other classes of insurance business: 15%
* Commission over and above can be mutually agreed between Indian Re-insurer(s) and the ceding insurer.
* **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:
* Incurred loss % (to be worked 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 is payable if the loss ratio exceeds 78%. Profit commission shall not exceed 14%.
**Impact Analysis**
**Indian Re-insurers**
* **Impact:** Must accept 5% obligatory cession from general insurance policies (excluding terrorism and nuclear pool premiums). May request immediate notification from ceding insurers for large cessions. Share profit commission on 50:50 basis with ceding insurer.
* **Action Required:** Accept the obligatory cession and potentially establish a process for receiving underwriting information for large cessions.
**General Insurance Companies/Ceding Insurers**
* **Impact:** Required to cede 5% of their general insurance policy sum insured (excluding terrorism and nuclear pool premiums) to GIC Re. Must inform Indian Re-insurer of any cession exceeding specified limits.
* **Action Required:** Adjust reinsurance programs to comply with the 5% obligatory cession requirement. Implement a notification process for large cessions.
Key Entities Referenced
Insurance Act, 1938: The primary law governing insurance in India, especially Section 101A and 101B referenced in the notification regarding obligatory cession.
Indian Re-insurers: The entities to which the obligatory cession applies and who will receive a mandated percentage of reinsurance from other insurance companies.
General Insurance Corporation of India (GIC Re): The sole entity with whom the entire obligatory cession is to be placed.
Insurance Regulatory and Development Authority of India: The regulatory body issuing the notification and responsible for overseeing the insurance sector.
Advisory Committee: Consulted under Section 101B of the Insurance Act, 1938 regarding this notification.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-ए.पी.-अ.-01012021-224076
xxxGIDHxxx
CG-AP-E-01012021-224076
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असाधारण
EXTRAORDINARY
भाग III—खण् ड 4
PART III—Section 4
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 570] िई ददल्ली, बुधिार, ददसम्ब र 30, 2020/ पौर् 9, 1942
No. 570] NEW DELHI, WEDNESDAY, DECEMBER 30, 2020/PAUSHA 9, 1942
भारतीय बीमा जिजियामक और जिकास प्राजधकरण
अजधसचू िा
हदै राबाद, 28 ददसम् बर 2020
फा. स.ं भा.बी.जि.जि.प्रा./आरआई/6/172/2020.—बीमा अजधजियम, 1938 की धारा 101ए की उप-धारा (2)
एिं (4) द्वारा प्रदत्त िजतियय का प्रयगग करत े ुए, प्राजधकरण, बीमा अजधजियम, 1938 की धारा 101बी के अधीि गठित
सलाहकार सजमजत के साथ परामिश करि े के बाद और केन्द्र सरकार के पूिश-अिुमगदि स े जिम्नजलजखत अजधसूचिा अथाशत्--
“जित्तीय िर्श 2021-22 के जलए अजििायश अध्यपणश ” िारी करता ह।ै
1. प्रयगज्यतााः यह अजधसूचिा बीमा अजधजियम, 1938 की धारा 101ए के उपबंध के अिुसार भारतीय
पुिबीमाकताशओं और अन्द्य प्रयगज्य बीमाकताशओं पर लाग ूहगगी।
2. अध्यपणश का प्रजतिताः भारतीय पुिबीमाकताश(ओं) के पास पिु बीमा की िािेिाली प्रत्येक साधारण बीमा पाजलसी
पर बीजमत राजि का प्रजतित अध्यपणश 1 अप्रलै 2021 से प्रारंभ हगिेिाल े 31 माच श 2022 तक के जित्तीय िर्श के
दौराि संबद्ध दकये िािेिाले बीमे के संबंध में 5% (पााँच प्रजतित) हगगा। आतंकिाद प्रीजमयम और िाजभकीय
समूह (न्द्यूजललयर पलू ) कग अध्यर्पशत प्रीजमयम इसके अपिाद ह गे, जििम ें यह `िून्द्य‘ दकया िाएगा। कुल अजििाय श
अध्यपणश केिल भारतीय साधारण बीमा जिगम (िीआईसी रे) के पास ही रखा िािा चाजहए।
3. ित ें:
क) अध्यपणश के बारे म ेंसचू िााः
i. बीजमत राजि की कगई भी सीमा 1 अप्रलै 2021 से 31 माचश 2022 तक की अिजध के दौराि दकये गय े
अध्यपणश के जलए लाग ूिहीं हगगी।
6427 GI/2020 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
ii. उपयुशतिय कग ध्याि म ें रखत े ुए भारतीय पुिबीमाकताश अध्यपशक बीमाकताश से अपेक्षा कर सकता ह ै दक िह
भारतीय पुिबीमाकताश द्वारा जिजिर्दष्टश राजि से अजधक दकसी भी अध्यपशण की िगजखम-अंकि सूचिा की
िािकारी तत्काल दे। िब भी अध्यपशण ऐसी जिजिर्दष्टश सीमाओं से अजधक हग िाता ह ै तब हर समय
अध्यपशक बीमाकताश भारतीय पिु बीमाकताश कग सूजचत करेगा।
ख) कमीििाः
व्यिसाय की जिजभन्न श्रेजणय के जलए अजििायश अध्यपणश पर कमीिि का प्रजतित जिम्नािुसार हगगााः
i. मगटर टीपी तथा तले और ऊिाश बीमा के जलए न्द्यूितम 5%।
ii. सामूजहक स्ट्िास्ट््य बीमा के जलए न्द्यूितम 10%।
iii. फ़सल बीमा के जलए न्द्यिू तम 7.50%।
iv. जिमािि बीमा के जलए औसत ितें।
v. बीमा व्यिसाय की सभी अन्द्य श्रेजणय के जलए न्द्यिू तम 15%।
उपयुशतिय स े अजधक कमीिि भारतीय पुिबीमाकताश(ओं) और अध्यपशक बीमाकताश के बीच पारस्ट्पठरक तौर पर
सहमत रूप में हग सकता ह।ै
ग) लाभ कमीििाः
भारतीय पुिबीमाकताश जिम्नजलजखत के फैलटररंग के बाद कायशजिष्पादि और अध्यपशक बीमाकताश के कुल
अजििायश संजिभाग के आजधलय के आधार पर अध्यपशक बीमाकताश के साथ 50% : 50% आधार पर लाभ
कमीिि का साझा करेगा।
i. उपगत हाजि % (3 जित्तीय िर्ों के अंत में गणिा करिी चाजहए)
ii. 2% प्रबंधि व्यय।
iii. 5% लाभ।
iv. 15% कमीिि।
v. 50% से 78% तक हाजि अिुपात।
कगई लाभ कमीिि देय िहीं ह ैयदद हाजि अिपु ात 78% से अजधक हग। लाभ कमीिि 14% से अजधक िहीं हगगा।
डॉ. सुभार् सी. खुंठटआ, अध्यक्ष
[जिज्ञापि-III/4/असा./428/2020]
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, the 28th December, 2020
F. No. IRDAI/RI/6/172/2020.—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 2021-22”.
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.
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, 2021 to 31st March, 2022, 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.[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 3
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, 2021 to 31st March, 2022.
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.
c) 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./428/2020]
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.