The IRDAI had issued an exposure draft on “Guidelines on Collateralized reinsurance transactions for placement of reinsurance business with CBRs in India” on 20 February 2024 (“Draft Guidelines”)…
The IRDAI had issued an exposure draft on “Guidelines on Collateralized reinsurance transactions for placement of reinsurance business with CBR” on 20 February 2024 (“Draft Guidelines”) and invited comments from all concerned stakeholders.
Following comments received, the IRDAI has now issued guidance on the subject as a part of its “Master Circular on Reinsurance, 2024” of 31 May 2024 (“Master Circular”), which comes into force from the date of its issuance. This Master Circular has been issued in furtherance of: (i) the IRDAI (Registration and Operations of Foreign Reinsurers Branches and Lloyd’s India) Regulations 2024 (“FRB Regulations”), and (ii) the IRDAI (Reinsurance) Regulations 2018 (“Reinsurance Regulations”) and sets out procedures and requirements in terms of various aspects set out in these regulations.
The Master Circular is divided into two parts Part I sets out guidance in relation to various operational aspects pertaining to ‘branches of foreign reinsurers’ (“FRBs”) or a Lloyd’s India Service Companies/Syndicates, and Part II sets out guidance for Cross Border Reinsurers
(“CBRs”) and it is in this Part II that the guidelines on collateralised placements have been set out.
The Master Circular specifies that the underlying objective for collateralized placements is to ensure that Indian Cedants “maintain their ability to meet obligations towards policyholders in India, while continuing their growth trajectory.”
