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Regulation
for
Life Insurance -
Reinsurance
1.
Short title and commencement
2. Definitions
3.
Procedure to be followed for reinsurance arrangements
4.
Inward reinsurance business
In
exercise of the powers conferred by section 114A of the Insurance
Act, 1938, read with sections 14 and 26 of the Insurance Regulatory
and Development Authority Act, 1999, the Authority, in consultation
with the Insurance Advisory Committee hereby makes the following
regulations, namely--
1.
Short title and commencement
(1)
These regulations may be called the Insurance Regulatory and
Development Authority (Life Insurance - Reinsurance) Regulations,
2000.
(2)
They shall come into force on the date of their notification in the
Official Gazette.
2.
Definitions
In
these regulations, unless the context otherwise requires--
(a) `Act' means the Insurance Act, 1938 (4 of 1938);
(b) `Authority' means the Insurance Regulatory and Development
Authority established under sub-section (1) of section
3 of the
Insurance Regulatory and Development Authority Act, 1999 (41 of
1999);
(c) `retention' means the amount of risk which an insurer assumes
for his own account;
(d)
words and expressions used and not defined in these
regulations, but defined in the Insurance Act, 1938 (4 of 1938) or
Insurance Regulatory and Development Authority Act, 1999 (41 of
1999), shall have the meanings respectively assigned to them in
those Acts as the case may be.
3.
Procedure to be followed for reinsurance arrangements
(1)
Every life insurer shall draw up a programme of reinsurance in
respect of lives covered by him.
(2)
The profile of such a programme, duly certified by the Appointed
Actuary, which shall include the name(s) of the reinsurer(s) with
whom the insurer proposes to place business, shall be filed with the
Authority, at least forty-five days before the commencement of each
financial year, by the insurer:
PROVIDED
that the Authority may, if it considers necessary, elicit from the
insurer any additional information, from time to time, and the
insurer shall furnish the same to the Authority forthwith.
(3)
The Authority shall scrutinise such a programme of reinsurance as
referred to in sub-regulation (2), and may suggest changes, if it
considers necessary, and the insurer shall incorporate such changes
forthwith in his programme.
(4)
Every insurer shall retain the maximum premium earned in India
commensurate with his financial strength and volume of business.
(5)
The reinsurer, chosen by the insurer, shall enjoy a credit rating of
a minimum of BBB of Standard and Poor or equivalent rating of any
international rating agency :
PROVIDED
that placement of business by the insurer with any other reinsurer
shall be with the prior approval of the Authority:
PROVIDED
FURTHER that no programme of reinsurance shall be on original
premium basis unless the Authority approves such programme:
PROVIDED
FURTHER that no life insurer shall have reinsurance treaty
arrangement with its promoter company or its associate/group
company, except on terms which are commercially competitive in the
market and with the prior approval of the Authority, which shall be
final and binding.
(6)
Every insurer shall submit to the Authority statistics relating to
its reinsurance transactions in such forms as it may specify,
together with its annual accounts.
4.
Inward reinsurance business
(1)
Every insurer who wants to write inward reinsurance business shall
adopt a well-defined underwriting policy for underwriting inward
reinsurance business.
(2)
An insurer shall ensure that decisions on acceptance of reinsurance
business are made by persons with adequate knowledge and experience,
preferably in consultation with the insurer's appointed actuary.
(3)
An insurer shall file with the Authority, at least forty-five days
before the commencement of each financial year, a note on its
underwriting policy indicating the classes of business, geographical
scope, underwriting limits and profit objective.
(4)
An insurer shall also file any changes to the note referred to in
sub-regulation (3) as and when a change in underwriting policy is
made.
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