Reinsurance

Reinsurance

Reinsurance is a contract between the insurance company (insurer) and a third party (re-insurer), wherein the latter will protect the former by paying losses sustained by it under the original contract of insurance.

Re-insurers from London, as well as other parts of Europe, see significant potential in the re-insurance market in India. Top four global re-insurers, Lloyds, Swiss Re, Munich Re and Berkshire Hathaway are amongst those eyeing India.

Bancasssurance

Private insurers have adopted bancassurance in a much bigger way than the state-owned Life Insurance Corporation (LIC) in the recent years. Bancassurance is distribution of insurance products through a bank's network.

In 2008-09, private insurers forked out US$ 44.4 million as commission for banassurance, while the payout by LIC for this distribution model was US$ 25,948.

Investment Policy

The FDI limit in the insurance space for foreign players is capped at 26 per cent—permissible under the automatic route subject to a licence from the official regulator, IRDA—but the government is planning to raise it to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.
IRDA has stipulated that the mandatory ceding by every general insurer in the country to the national reinsurer – General Insurance Corporation (GIC), would continue to remain at 10 per cent as under current regulations.
IRDA has also allowed insurance companies to offer 'Health plus Life Combi Product', a policy that would provide life cover along with health insurance to subscribers.
Pension Fund Regulatory and Development Authority (PFRDA) would launch a low-cost pension scheme on April 1, 2010, to provide social security cover to economically weaker sections like rickshaw pullers, barbers and daily-wage labourers.
The Road Ahead

Saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players, according to 'Booming Insurance Market in India (2008-2011)”. Further, according to the report,

Total life insurance premium in India is projected to grow US$ 266 billion by 2010-11
Total non-life insurance premium is expected to increase at a compound annual growth rate (CAGR) of 25 per cent for the period spanning from 2008-09 to 2010-11
The home insurance segment is set to achieve a 100 per cent growth as financial institutions have made home insurance obligatory for housing loan approvals
In the next three years, health insurance is poised to become the second largest business for non-life insurers after motor insurance