Go Digit promoters Watsa, Goyal seek regulatory nod for reinsurance biz

Canadian billionaire Prem Watsa’s Fairfax group and Kamlesh Goyal, who are the promoters of general insurance company Go Digit General Insurance, have plans to set up a private domestic reinsurance company in the country and have applied to the insurance regulator to obtain a license for the same.  

In a late night statement, the general insurance company said, “"Promoters of Go Digit General Insurance's parent company, Prem Watsa's Fairfax and Kamesh Goyal, plan to set up a reinsurance company in India. The application is subject to approval of the Insurance Regulatory and Development Authority of India (IRDAI)."

The minimum capital requirement for setting up a reinsurance business is Rs 200 crore and if reports are to be believed, the Watsa – Goyal team is planning to put in double the capital requirement into the venture.

Currently, India has one domestic reinsurance company, the state-owned General Insurance Corporation (GIC Re). GIC Re gets obligatory cession from Indian general insurers. Obligatory cession refers to the part of business that general insurance firms have to mandatorily cede to the national reinsurer, GIC Re. 

The insurance regulator has lowered the obligatory cession of sum insured on each general insurance policy that is to be reinsured with state-owned reinsurer GIC Re to 4 per cent, beginning financial year 2022-23 (FY23), from 5 per cent earlier. GIC Re also has the right to first refusal when it comes to Indian reinsurance business.

Apart from GIC Re, there are 10 foreign reinsurance branches operating in India.