IRDAI has maintained the obligatory cession of each general insurance policy that is to be reinsured with an Indian firm at 5 per cent for FY21.
“The percentage cession of the sum insured on each general insurance policy to be reinsured with the Indian reinsurer(s) shall be 5 per cent in respect of insurance attaching during the financial year starting April 1, 2021, till March 31, 2022, except the terrorism premium and premium ceded to Nuclear Pool, wherein it would be made ‘NIL’,” IRDAI said.
The entire obligatory cession has to be reinsured with India’s largest reinsurer, General Insurance Corporation of India (GIC Re).
Obligatory cession refers to the part of the business that general insurance companies have to mandatorily cede to the national reinsurer, GIC Re. Insurers have to cede 5 per cent of their premium on every general insurance policy sold to GIC Re.
