Insurers Push for Abolition of Mandatory Allotment to GIC Reinsurance
Title: Insurance Companies Push for Changes in Obligatory Cession Policy in Mumbai
Mumbai: With the ongoing commissions on ceding a mandatory portion of their business to GIC RE, insurers in Mumbai are looking to sway the government to either decrease or eliminate the obligatory cession. Representatives from non-life and pure health insurance companies will be voicing their concerns during a meeting with the Department of Financial Services secretary, M Nagaraju on May 7th.
Green Finance Body and Shiv Sena Drama
Insurance companies argue that the obligatory cession policy distorts competition and hinders innovation in the reinsurance sector, favoring the public sector over private insurers and foreign reinsurers. As per the documents released by the IRDAI for the financial year 2025-26, the obligatory cession stands at 4%. This means, private insurers are required to cede a portion of their reinsurance business to GIC Re, essential for handling large-scale claims during catastrophic events and minimizing reliance on foreign reinsurers.
However, the pressure from private insurers for a change in the policy has not found traction yet. The ongoing situation is a source of contention between the private insurers and the regulatory framework backing GIC Re.
In other news, the Shiv Sena has demanded a probe against Aaditya Thackeray, alongside Dino Morea, but further details are yet to be revealed. The fusion of these two topics in Mumbai's landscape makes for an intriguing week ahead.
The insurance companies in Mumbai are urging for changes in the obligatory cession policy to foster healthy competition and promote innovation in the reinsurance business, an issue that intertwines with the financial interests of the private insurers and the business sector at large. As the pressure mounts, the ongoing contestation between the private insurers and the regulators raises concerns about the future of the finance industry in Mumbai.
