Merry Christmas


Hello everyone. Hope all are doing good and are ready for the holidays. As 2018 is now at it’s end and I hope the year went good for all.

One of the biggest festivals of the year is tomorrow i.e 25th December. Just wanted to wish you all Merry Christmas. May this Christmas brings enormous happiness in everyone’s life and all your wishes comes true. Enjoy the festival with full enthusiasm. Celebrate and spread happiness to others as well. God bless you all. 😊

Merry Christmas to all of you once again. Stay tuned, be happy and keep enjoying. 🤡

Ashish Kumar

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IRDAI (Reinsurance) Regulations, 2018


The Insurance Regulatory and Development Authority of India (IRDAI) came up with the reinsurance regulations recently in December 2018. This is a first kind of regulation of its type, specific to reinsurance repealing IRDAI (General Insurance – Reinsurance) Regulations and IRDAI (Life Insurance – Reinsurance) Regulations which were released in 2016. This regulation will be called as IRDAI (Reinsurance) Regulations, 2018 which will be effective from 1st January 2019. This article will provide some of the insights of this newly released regulation covering some of the basic terminologies, areas like Cross Border Reinsurer (CBR), cession limit, amendment to previous regulations etc.

There are total 12 regulations contained in IRDAI (Reinsurance) Regulations, 2018. Some of the important points which need to be known from these regulations are as follows:

  • Reinsurance Program: Every insurer need to have a reinsurance program with the objective of having maximum retention within the country. The Board approved reinsurance program need to be submitted to the IRDAI before 45 days of the commencement of the financial year. For any changes made to the reinsurance program, insurer need to submit the final board approved reinsurance program within 30 days of the commencement of the financial year. The reinsurance program along with the retention policy (discussed below) need to be submitted to the Authority i.e IRDAI. (Regulation 3)
  • Retention Policy: The first objective of reinsurance as stated in these regulations, is to maximize retention within the country. Keeping this objective in mind insurers need to formulate a retention policy. Every Indian insurer shall maintain the maximum possible retention in commensuration with its financial strength, quality of risks and volume of business ensuring that the reinsurance arrangement is not fronting. (Regulation 3). Life Insurer should maintain a minimum retention of
  1. 25% of sum at risk under pure protection life insurance business portfolio
  2. 50% of sum at risk under other than pure protection life insurance business portfolio

The retention policy also states that “Every Indian Reinsurer shall maintain a minimum retention of 50% of its Indian business”, as mentioned in Regulation 3(2)(C) .

  • Fronting: This is one of the confusing jargons used in reinsurance. Let us try to understand this with an example. An insurer is having motor portfolio and what it does is instead of keeping some portion of risks within itself, the insurer transfers most or all part of the risks to a reinsurer, thus relieving itself from the financial burden. This is an example of fronting. Insurer transferring most or all portion of risks to reinsurers. Generally, new insurers use fronting as a risk transfer tool in order to reduce their financial burden at the time of claims. Fronting is defined as a process of transferring risk in which an Indian Insurer cedes or retro-cedes most of or all of the assumed risk to a Re-insurer or retrocessionaire. (Regulation 2(13))
  • IIOs: IIOs is an acronym of International Financial Service Center (IFSC) Insurance Office. This means a branch office of an insurer or reinsurer domiciled in India or outside, which has been granted a certificate of registration by the Authority to set up its office in IFSC-SEZ, to transact insurance business or reinsurance business or both. IIO has been defined in Regulation 2(17) of these Regulations. This is a new concept which specifies setting up of offices in IFSC Special Economic Zone (SEZ).
  • Foreign Reinsurer Branch (FRB): This means a branch of a Foreign Reinsurer who has been granted certificate of registration by the Authority under the Insurance Regulatory and Development Authority of India (Registration and Operations of Branch Offices of Foreign Reinsurers other than Lloyd’s) Regulations, 2015 or Insurance Regulatory and Development Authority of India (Lloyd’s India) Regulations, 2016, as amended from time to time.

Cross Border Reinsurer (CBR)

CBR, as the name suggests, means a foreign reinsurers including Lloyd’s Syndicates, whose place of business is established outside India and which is supervised by its home country regulator. CBR includes:

  • Parent or Group companies of FRBs (Foreign Reinsurer Branch)
  • Parent or Group companies of IIOs.

CBR can be understood by an example. Consider an Indian insurer wants to transfer its risk to a reinsurer which is not in India but in United Kingdom (UK). Indian insurer can transfer its risk to UK based reinsurer whose place of business is in UK and not in India. Then the UK based reinsurer is a CBR. In order to transact business through CBRs, there are eligibility criteria which a CBR (like the UK based reinsurer) should have. Indian insurer can place their business through CBRs if CBRs meet the following eligibility criteria as defined in Regulation 4:

  • The CBR is an insurance or Re-insurance entity in its home country, duly authorized by its home country regulator to transact re-insurance business during the immediate past three continuous years;
  • The CBR has a credit rating of at least BBB from Standard & Poor or equivalent rating from an international rating agency during the immediate past three continuous years;
  • The home country of the CBR has signed Double Taxation Avoidance Agreement with India;
  • The CBR has minimum solvency margin or capital adequacy, as specified by the home country regulator, during the immediate past three continuous years;
  • The past claims settlement experience of the CBR is found to be satisfactory;
  • Any other requirements as stipulated by the Authority from time to time.

One of the most important aspects related to CBR is what is known as Cession Limits. Cession means transfer of risks and the insurance company which transfers the risks to a reinsurer is known as Cedant. Cession Limits restricts Indian insurer to transfer risks to CBRs based on the rating of CBRs. The rule is simple; better the rating of CBR, more risk can be transferred and vice-versa. The below table provides the maximum cession limit that can be allowed per CBR as defined in Regulation 6.

Rating of the CBR as per Standard & Poor or equivalent Maximum overall cession limits

allowed per CBR

Greater than A+ 20%
Greater than BBB+ and up to and including A+ 15%
BBB and BBB+ 10%
Note: The above percentages are to be calculated on the total reinsurance premium ceded out-side India.

Reinsurance Placements

Regulation 5 describes the way of placing reinsurance placements. According to Regulation 5(1), every insurer (Cedant) shall be free to obtain best terms for its reinsurance protection of domestic risks, subject to the following:

  • Cedants shall seek terms at least from all Indian Re-insurers, who have been transacting Re-insurance business (other than emanating from obligatory cession) during the immediate past three continuous years and at least from four FRBs. (Regulation 5(1)(A) )
  • No Cedant shall seek terms from IIOs and FRBs having credit rating below A- from Standard & Poor’s or equivalent rating from any other International Rating Agency. (Regulation 5(1)(B)(a) and Regulation 5(1)(B)(b) )

Order of Preference

One of the most important aspects of reinsurance placement in Indian context is Order of Preference which has been revised in IRDAI (Reinsurance) Regulations, 2018. Order of preference means in which order, the insurance company in India should place their reinsurance business. In simple terms, which reinsurers should be given preference while placing reinsurance business? As per Regulation 5(2)(A), every cedant shall offer best terms, for participation in the following order of preference:

  1. to Indian Re-insurers, transacting re-insurance business (other than emanating from obligatory cession) during the immediate past three continuous financial years;
  2. to other Indian Re-insurers and FRBs;
  3. to the IIO as under regulation 5(1)(B)(a) which provided the best and lead terms with capacity of not less than 10%;
  4. to the CBR as under regulation 5(1)(B)(b) which provided the best and lead terms with capacity of not less than 10%;
  5. to other IIOs;
  6. To other Indian Insurers (only Facultative) and CBRs.

A thorough look on the above order of preference interprets that the Indian insurers should give first preference to General Insurance Corporation of India, popularly known as GIC Re as it is the only Indian reinsurer transacting reinsurance business for the past consecutive three financial years.  Other Indian reinsurers and FRBs come at second preference followed by IIOs and CBRs.

Reinsurance placements and order of preference as defined in Regulation 5(1) and Regulation 5(2) are not applicable to the following as defined in Regulation 5(3)

  1. Retrocession or reinsurance placements of Indian Re-insurers, FRBs, IIOs and Insurance Pools;
  2. Existing inter-company arrangements of the Indian Insurers transacting direct insurance business;
  3. Obligatory cessions as notified from time to time under Section 101A of the Act;
  4. Re-insurance placements of Indian insurers transacting life insurance business. However, Indian insurers,transacting life insurance business, shall endeavor to utilize the Indian domestic capacity before offering to the CBRs.

Alternative Risk Transfer (ART) and Domestic Insurance Pool

Insurer can initiate the proposal for an insurance pool which needs to be approved by the IRDAI as defined in Regulation 7. IRDAI approval is required for the formation of domestic insurance pool.

As far as Alternative Risk Transfer (ART) is concerned, there is a provision for ART solutions for Indian insurers as per Regulation 8. Insurers intending to adopt ART solutions need to submit their proposal to the IRDAI and after examining various aspects, IRDAI may grant permission to adopt ART solutions. IRDAI approval is required for adopting ART solutions.

What’s new in IRDAI (Reinsurance) Regulations, 2018

After having a walk through on IRDAI (Reinsurance) Regulations, 2018, let us see what is new in these regulations which are mentioned below:

  • Order of preference revised.
  • Order of preference not applicable for life insurers.
  • Every Indian Reinsurer shall maintain a minimum retention of 50% of its Indian business.
  • Amendment to Regulation 4 of IRDAI (Registration and Operations of Branch Offices of Foreign Reinsurance Other than Llyod’s) Regulations, 2015 which has been changed to, An applicant shall make a requisition for registration application under for Re-insurance business wherein the branch office of foreign Re-insurer shall maintain a minimum retention of 50% of the Indian Re-insurance business.”
  • For FRBs, there is no category as such now. The minimum retention is 50%. An applicant shall make a requisition for registration application for Re-insurance business wherein the branch office of foreign Re-insurer shall maintain a minimum retention of 50% of the Indian Re-insurance business. This removes Category B (minimum retention of 30%) of IRDAI (Registration and Operations of Branch Offices of Foreign Reinsurance Other than Llyod’s) Regulations, 2015.
  • Amendment to Regulation 8 of IRDAI (Llyod’s India) Regulations, 2016 which has been changed as, “An applicant shall make a requisition for registration application for Re-insurance business wherein the Lloyd’s India Syndicate shall maintain a minimum retention of 50% of the Indian Re-insurance business.”
  • Provision for Alternate Risk Transfer (ART).

I have attached the IRDAI (Reinsurance) Regulations, 2018 below. One can download the regulation for their reference.

IRDAI (Reinsurance) Regulations 2018

Ashish Kumar

नीती में राजनीति |


वहाँ जल रहे हैं अरमान रात और दिन.
वो कहते हैं की करेंगे काम एक दिन.
यहाँ हर जगह अंधियारा है.
अंदर और बाहर कष्टों का बसेरा है.
क्या करेंगे लोग इस बहार में.
यहाँ लोग जी रहें आँसुओं की बहार में .
जल गये शमशान मे लुटा के सब कुछ.
सब खो दिया अब बचा नही कुछ.
यहाँ कदम कदम पर उन्नति की बात होती है.
नेता अभिनेता बन कर अपनी रोटियाँ सेक्ते हैं.
और लोग आँसुओं से दिए जला कर जीते हैं.
नीति तो बनी पर उसपे राजनीति क्यूँ हुई.
ऐसी इस्थति पैदा ही क्यूँ हुई???

वो कहते हैं ग़रीबी हटाएँगे.
खुशहाली और मुस्कुराहट लाएँगे.
जो रोशनी मे जीते हैं उन्हे अंधेरा कैसे समझ आएगा?
रोटी ना मिलने का दर्द कैसे पता चल पाएगा?
जिन पर बीती है उनसे पूछो भूख क्या होती है.
बिना सब्ज़ी के पानी से रोटी कैसे खाते हैं?
हद तो तब होती है जब पानी भी ना मिले.
भूख मिटाने को…
आँसू के साथ ही रोटी खा लेते हैं.
आज़ाद तो हो गये पर आज़ादी मिली कहाँ?
भूख से मरते हुए अब भी हैं लोग यहाँ.
हर गली, नुक्कड़ चौराहों पर नज़र डालो.
कुछ वक़्त निकाल कर ज़रा इन्हे भी संभलो.
देख रहा हूँ मैं ये नज़ारा कई वर्षों से.
हर रोज़ लोग मरते हैं भूख से.
इतने वादे इतने कदम कहाँ रह जाते हैं.
समझ नहीं आता ये भूख से लोग मरते ही जाते हैं.
इन्हें कपड़े नहीं हैं तन ढकने को.
ठंड से तिठुरते…
ढक लेते है पेट अपने पाँव से.
नीति बनाने वालो कहाँ है वो नीति?
सच तो ये है…
यहाँ नीति मे राजनीति चलती है.
पिसते हैं बुज़ुर्ग और गारीद पर इनकी रोटियाँ सिकटी हैं.
दुख होता ये जान कर.
नीति तो बनी पर उसपे राजनीति क्यूँ हुई.
ऐसी इस्थति पैदा ही क्यूँ हुई???

– Ashish Kumar

Oh my dear…


Roses are red.
The sky is blue.
Oh my dear…
I think, I love you.

Mind is fresh.
The day I saw you.
Oh my dear…
I think, I do love you.

You make me feel joy.
We both enjoy.
You became my life.
I became your life.
This reason is enough.
For both of us to survive.
How this happened?
I have no clue.
Oh my dear…
I love you.

The day you entered in my life.
Life became more than a life.
You wanted to become my wife.
I realized, it was a lie.
When you stared at me.
Scolded brutally and badly.
I understood, everything was illusion.
Made me to go in depression.
Both were happy as the time passed.
I now realize, you were doing time pass.
Playing is good but not with heart.
At the end, it surely hurts.
Heart broke and soul collapsed.
You are not the right one, I did realized.
Collected the broken pieces of heart.
As it stuck like glue.
Oh my dear…
I hate you.
I do hate you…

– Ashish Kumar

 

The Writer’s Block…


Writing is an art. When a writer pens down his creativity with the use of magical words, a new literary piece is born. It takes immense effort to write, from beginning to the end. What to write and how to present it? It happens several times when you thought of writing something chosen but came up writing on something else. Isn’t it??? Even though when you come up writing something else which you didn’t thought of doing so and when the end result is satisfying, it is again a new creation. This happened with me several times. I think to write something specific and come out of writing something else.

Writing gives me satisfaction and I am sure it gives satisfaction to all who writes. But what happens when the writers are unable to write for some time or the thinking ability slows down for a while. The situation where writers are unable to produce their literary pieces is what we call the “writer’s block”. It is the situation where the author loses the ability to produce new work or experiences a creative slowdown. This is quite natural and happens with every writer. It gives the writer to take rest from writing for a while and come back with refreshing new literary pieces. Going forward, refreshment does play a role when one comes back. As the mind is ready, devoted and the best part is, one writes from his heart.

As it is said, when you write keep the heart and the soul intact in your literary work, then only readers will get the real fragrance and taste of your writing.  Don’t let the “heart and soul” missing in your work. Writer’s block is a way to revive yourself, think little different and come up with a new genre. For example, if someone is writing mostly on romanticism, he may come up writing on social issues etc. I think the writer’s block gives a chance to think differently, try different genre and also present in different way. I have been away from writing several times. In blogging world, I was silent for about six months too due to my studies and other personal stuffs but was always happy to come back. I avoid forceful writing. Whenever I have something in my mind, I try to present to all of you. Writer’s block is not a misfortune. There might me several reasons making writers to go in the writer’s block, from personal to professional etc. But there is always a chance for come back. So, what is your take on writer’s block? Have you ever been in the writer’s block? Do share your views and experience…

– Ashish Kumar