Non-life insurers not keen on paying obligatory cession to GIC Re

The obligatory cession was reduced from 5% to 4% for 2022-23. The impact of the reduction on GIC Re will be Rs 2,000 crore

There is growing clamour among non-life insurers that the business they cede to state-owned reinsurer General Insurance Corporation (GIC Re) of India mandatorily must come down or be done away with as the commission paid by the reinsurer does not reflect the industry cost structure.

While no formal proposal has been drafted by industry players through the General Insurance Council, but in discussions with the regulator, this issue has cropped up, resulting in the regulator forming a task force.

Obligatory cession refers to a part of the business that Indian general insurance companies must mandatorily cede to the national