The committee that recommends the percentage of obligatory cession that general insurers have to cede to state-owned General Insurance Corporation (GIC Re) has suggested that the obligatory cession be brought down to zero from the existing 4 per cent. This is a view that has been endorsed by IRDAI, said its chairman Debasish Panda.
“There is a committee, which the government appoints every year to recommend this. The committee has given its recommendations and we have sent them to the government, endorsing their recommendations. The committee has said that the obligatory cession should be reduced to zero,” Panda said in an interview to CNBC TV18.
The obligatory cession was reduced from 5 per cent to 4 per cent in FY23. The regulator has been reducing the obligatory cession over time.
Earlier it was 20 per cent, which came down to 15 per cent, then to 5 per cent and now 4 per cent.
Slowly, the regulator is making sure that the compulsory cession goes down and more re-insurers get into the market to develop India as a reinsurance hub.
