(1) These regulations may be called the Insurance Regulatory and Development Authority (General Insurance-Reinsurance) Regulations, 2013.

(2) These regulations replace the Insurance Regulatory and Development Authority (General Insurance-Reinsurance) Regulations, 2000.

(3) These regulations shall come into force on the date of their notification in the Official Gazette.

In these regulations, unless the context otherwise requires

(a) Act means the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);

(b) Authority means the Insurance Regulatory and Development Authority established under sub-section (1) of Section 3 of the Act;

(c) Cedant is an insurer who enters into a re-insurance contract or a re-insurer who enters into a retrocession contract;

(d) Cession means the part of insurance passed to a re-insurer by the insurer which issued a policy to the original insured or part of contract ceded by a re-insurer to a retrocessionaire;

(e) Cover note is a written document issued by the re-insurer or the re-insurance broker authorised by it, detailing the contract terms and conditions of the contract and the details of the percentage of risk placed with each re-insurer.

(f) Facultative means the re-insurance of a part or all of a single policy in which cession is negotiated separately and that the re-insurer and the insurer have the option of accepting or declining each individual submission;

(g) Indian re-insurer/s means the insurer/s who carry on exclusive re-insurance business and is notified in this behalf by the Authority under Section 101-A of Insurance Act.

(h) Pool means any joint underwriting operation of insurance or re-insurance in which the participating insurer/s or re-insurer/s assume a pre-determined and fixed interest in all business written.

(i) Retrocession means the transaction whereby a re-insurer cedes to another insurer or re-insurer all or part of the re-insurance it has previously assumed;

(j) Retention means the portion of the risk which an insurer assumes for his own account;

(k) Re-insurance contract is the legally binding document on all the parties that provide a complete, accurate and definitive record of all the terms and conditions and other provisions of the re-insurance contract.

(l) Treaty means a re-insurance arrangement between the insurer and the re-insurer, usually for one year or longer, which stipulates the technical particulars and financial terms applicable to the re-insurance of some class or classes of business;

(m) Words and expressions used and not defined in these regulations but defined in the Insurance Act, 1938 (4 of 1938) or the General Insurance Business Nationalisation Act, 1972 (57 of 1972) or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), rules made thereunder shall have the meanings respectively assigned to them in those Acts or rules as the case may be.

(1) The Re-insurance Programme of every (re)insurer shall be guided by the following objectives to:

(a) Maximum retention within the country;

(b) Develop adequate capacity;

(c) Secure the best possible protection for the re-insurance costs incurred;

(d) Simplify the administration of business.

(2) Every (re)insurer shall maintain the maximum possible retention commensurate with its financial strength, quality of risks and volume of business. The Authority may require an (re)insurer to justify its retention policy and may give such directions as considered necessary in order to ensure that the Indian (re)insurer is not merely fronting for a foreign insurer.

(3) Every insurer shall cede such percentage of the sum assured on each policy for different classes of insurance written in India to the Indian re-insurer/s as may be specified by the Authority in accordance with the provisions of Part IV-A of the Insurance Act, 1938.

(4) The re-insurance programme of every (re)insurer shall commence from the beginning of every financial year. Every (re)insurer shall submit to the Authority, his re-insurance programme for the forthcoming year, 45 days before the commencement of the financial year.

Notwithstanding what is stated above, the Authority, if it considers necessary, may direct the (re)insurer to carry out changes to the re-insurance programme filed with it and the (re)insurer shall incorporate such changes forthwith in their re-insurance programme.

(5) The (re)insurers shall ensure that the re-insurance arrangements in respect of catastrophe accumulations, using various realistic disaster scenario testing are adequate and approved by their Board of Directors before filing the same with the Authority along with their re-insurance programme.

(6) Within 30 days of the commencement of the financial year, every (re)insurer shall file with the Authority a copy of every re-insurance treaty contract wording and excess of loss cover covernote in respect of that year together with the list of re-insurers their ratings and their shares in the re-insurance arrangement. All re-insurance arrangements must be documented and filed with the Authority within 30 days of commencement of the financial year.

(7) The Authority may call for further information or explanations in respect of the re-insurance programme of an (re)insurer and may issue such direction, as it considers necessary.

(8) Every re(insurer) shall file with the Authority any new re-insurance arrangement, giving full details, documentation, reasons for such an arrangement together with the approval of the Board of Directors within 15 working days of holding the Board meeting. The re(insurer) shall further ensure that the renewal of such a re-insurance arrangement coincides with financial year.

(9) (Re)insurers shall place their re-insurance business outside India with only those re-insurers who have over a period of the past five years counting from the year preceding for which the business has to be placed, enjoyed a credit rating of at least BBB (with Standard and Poor) or equivalent rating of any other international rating agency. The (re)insurers shall consider past claims performance of the re-insurers while accepting their participation in the re-insurance programme. Placements with other re-insurers shall require the approval of the Authority. (Re)Insurers may also place re-insurances with Lloyd's syndicates taking care to limit placements with individual syndicates to such shares as are commensurate with the capacity of the syndicate.

(10) The Indian Re-insurer shall organise domestic pools for re-insurance surpluses in fire, marine hull and other classes in consultation with all insurers on basis, limits and terms which are fair to all insurers and assist in maintaining the retention of business within India at such percentages as the Authority may specify from time to time. The arrangements so made shall be submitted to the Authority within three months of the formation of such pools, for approval.

(11) Surplus over and above the domestic re-insurance arrangements class-wise can be placed by the (re)insurer independently with any of the re-insurers complying with sub-regulation (7) subject to the following limits of the total re-insurance premium ceded outside India being placed with any one re-insurer:

Where it is necessary in respect of specialised insurance to cede a share exceeding such limit to any particular re-insurer, the (re)insurer may seek the specific approval of the Authority giving reasons for such cession.

(12) Every insurer shall offer an opportunity to the Indian Re-insurer to participate in its facultative and treaty surpluses before placement of such cessions outside India. The Indian re-insurer shall set up appropriate market-wide re-insurance arrangements for this purpose.

(13) Every (re)insurer shall be required to submit to the Authority information and returns relating to its re-insurance transactions in such forms as the Authority may specify or require together with its annual accounts.

(1) Every (re)insurer wanting to write inward re-insurance business shall have a well-defined underwriting policy approved by its Board of Directors for underwriting inward re-insurance business.

(2) The (re)insurer shall file with the Authority, at least forty-five days before the commencement of each financial year, its underwriting policy stating the classes of business, geographical scope, underwriting limits and profit objective.

(3) The (re)insurer shall ensure that decisions on acceptance of re-insurance business are made by persons with necessary knowledge and experience.

(4) The (re)insurer shall also file any changes to the underwriting policy as and when a change is made duly approved by its Board of Directors.

(1) Every (re)insurer shall make outstanding claims provisions for every re-insurance arrangement accepted on the basis of loss information advices received from Brokers/Cedants and where such advices are not received, on an actuarial estimation basis.

(2) In addition, every (re)insurer shall make an appropriate provision for incurred but not reported (IBNR) claims on its re-insurance accepted portfolio on actuarial estimation basis.

1. IRDA, Noti. No. F. No. IRDA/Reg. 5/63/2013, dated February 7, 2013, published in the Gazette of India, Extra., Part III, Section 4, dated 13th February, 2013, pp. 4 8, No. 35.