The Insurance Regulatory and Development Authority (IRDA) has allowed general insurance companies a rebate in the condition of mandatory reinsurance from GIC RE. This rebate is 1%. The new rule will be mandatory for GIC Re from January 1, 2023.

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After this, the government reinsurance company GIC RE (General Insurance Corporation of India Limited) will have to compulsorily get reinsured at 4% premium instead of 5% of the total business. This will make GIC RE suffer from premium loss of up to Rs 2000 crore.

The mandatory GIC RE insurance will be reduced from 5% to 4% for FY2023.

What is Reinsurance?

Reinsurance is insurance for insurance companies. GIC RE was created to cover reinsurance that General Insurance firms were mandated to cover.

In the last few years, IRDA has reduced compulsory re-insurance from 20% to 5% in successive years. The regulatory body also fixed commission in the different business of Reinsurance
- at least 5% in Oil & Energy & Motor Third Party,
-10% in Group Health business,
-7.5% in Crop Insurance, and
-at least in all remaining business 15%