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The Insurance Regulatory and Development Authority of India (IRDAI) (Re-insurance) Regulations 2018 (2018 regulations) were notified on 12 December 2018 and came into force on 1 January 2019. These regulations have:

  • consolidated the provisions governing reinsurance business in India into one set of applicable regulations; and
  • introduced new requirements for both life and general reinsurance business.

The 2018 regulations repeal the IRDAI (General Insurance – Reinsurance) Regulations 2016 and the IRDAI (Life Insurance – Reinsurance) Regulations 2013. They also amend (where relevant) the IRDAI (Registration and Operations of Branch Offices of Foreign Reinsurers Other than Lloyd's) Regulations 2015 (the Branch Office Regulations) and the IRDAI (Lloyd's India) Regulations 2016 (the Lloyd's India Regulations).

The key changes introduced by the 2018 regulations are summarised below.


The 2018 regulations apply to 'Indian insurers', which means:

  • 'insurers', as defined under Section 2(9) of the Insurance Act 1938;
  • International Financial Services Centre (IFSC) insurance offices; and
  • 'exempted insurers', as defined under Section 118(c) of the act.

Per Section 2(9) of the act, 'insurers' include Indian insurance companies, insurance cooperative societies, statutory bodies carrying on insurance business and foreign reinsurance branches in India.

Further, in addition to the insurance segments expressly covered by the 2016 regulations and 2013 regulations, the 2018 regulations also cover engineering, aviation, crops, trade credits, liability, oil and energy. The life insurance segment also expressly includes health insurance policies issued by life insurers.

Reinsurance programmes

The 2018 regulations retain the objectives of the reinsurance programme set out under the erstwhile regulations. However, the guidance regarding maximising retention within India is now subject to "proper and adequate diversification of risks".

Retention policies In relation to the retention policy that Indian insurers must have in place, the 2018 regulations introduce the following changes:

  • Indian insurers must formulate a suitable retention policy for each insurance segment. In this regard, the 2013 regulations were more specific and required the formulation of a retention policy for each type of product or risk. The 2016 regulations contained the same requirement if the insurance segment consisted of more than one product.
  • Every Indian insurer transacting life insurance business must now maintain at least 25% of the sum at risk for pure protection life insurance business portfolios and 50% for other portfolios. This appears to be a more uniform limit compared with the 2013 regulations, which imposed various monetary limits on retention based on:
    • the age of the insurer or product; and
    • the type of product (eg, unit-linked insurance plans).

The restrictions on quota shares for health insurance and group term insurance business under the 2013 regulations no longer apply.

  • Separately, both Indian reinsurers and foreign reinsurance branches must retain at least 50% of their Indian business.

Reinsurance arrangements This part of the 2018 regulations appears to align fairly closely with the 2016 regulations. Therefore, it will be a change for life insurers that previously followed the 2013 regulations. In addition, the provisions on reinsurance arrangements modify the existing guidance under the 2016 regulations and introduce a number of new requirements for entering into reinsurance arrangements.

The significant new filing provisions are as follows:

  • Indian insurers must file:
    • a declaration by their CEO that the entity has made no changes in the reinsurance programme with the IRDAI within 30 days of commencement of the financial year;
    • reinsurer-specific details of actual placements during the previous financial year for each insurance segment within 30 days of commencement of the financial year; and
    • any new reinsurance arrangements or revisions thereof following the submission of a final reinsurance programme, giving full details and reasons for the arrangement, within 15 days of the board's approval.
  • Reinsurance programmes must now generally include insurance segment information – a change from the previous product information requirement. In addition to the details stipulated in the 2016 regulations, reinsurance programmes must include:
    • reasons for variations in the retention limits for the proposed financial year;
    • segment statements regarding the net retention ratio and the actual gross written premium income for the current financial year (estimated);
    • segment statements showing actual reinsurance costs for the previous three financial years (changed from two), including the estimated cost for the current financial year;
    • details of any inward reinsurance business (separate reports for domestic and foreign business); and
    • details of any inter-company reinsurance arrangements with other Indian insurers transacting direct insurance business.
  • Every Indian reinsurer, foreign reinsurance branch and IFSC insurance offices writing reinsurance business must file a board-approved underwriting policy and any subsequent changes to it.

Maintenance of records Indian insurers must submit in soft copy:

  • all reinsurance contracts; and
  • a list of reinsurers, with their credit rating and shares in the proportional and non-proportional reinsurance arrangement.

The hard copies must be maintained as per the previous regulations and may be inspected by the IRDAI.

Cross-border reinsurers

The definition of 'cross-border reinsurer' has been modified to mean a foreign reinsurer only, including Lloyd's syndicates. It also includes parent or group companies of foreign reinsurance branches and IFSC insurance offices. The definition therefore now excludes foreign insurers. While the eligibility criteria for Indian insurers to place business with a cross-border reinsurer remain broadly the same, cross-border reinsurers are now expressly required to be entities authorised in their home country to conduct reinsurance business for the past three continuous years.

Procedures for reinsurance placements

These provisions replace the earlier provisions regarding order of preference set out in the Branch Office Regulations and apply only to 'cedants', which are defined under the 2018 regulations as Indian insurers writing direct insurance business that contractually cede a portion of the risk. These provisions do not apply to:

  • reinsurance placements of Indian insurers transacting life insurance business;
  • retrocession or reinsurance placements of Indian reinsurers, foreign reinsurance branches, IFSC insurance offices and insurance pools; and
  • existing inter-company arrangements of the Indian insurers transacting direct insurance business.

Obtaining best terms Every cedant is free to obtain the best terms for its reinsurance coverage requirements, subject to the following conditions:

  • Cedants must seek terms from:
    • all Indian reinsurers that have been transacting reinsurance business (other than that emanating from obligatory cession) during the past three continuous years; and
    • at least four foreign reinsurance branches.
  • Cedants cannot seek terms from IFSC insurance offices and cross-border reinsurers with a Standard and Poor's credit rating below A- or an equivalent rating from any other international rating agency.
  • Cedants must comply with the 2018 regulations, irrespective of the involvement of a reinsurance broker.

Offer for participation Cedants must comply with the following order of preference for their reinsurance placements:

  • Indian reinsurers transacting reinsurance business (other than that emanating from obligatory cession) during the past three continuous financial years;
  • other Indian reinsurers and foreign reinsurance branches (foreign reinsurance branches have been moved up with other Indian reinsurers);
  • IFSC insurance offices that meet the required credit rating and provide the lead terms with a capacity of no less than 10%;
  • cross-border reinsurers that meet the required credit rating and provide the lead terms with a capacity of no less than 10%; and
  • Indian insurers (only facultative) and cross-border reinsurers.

There are also specific requirements as to the total sum insured required in order for a cedant to make an offer to cross-border reinsurers that are applicant companies of any foreign reinsurance branch (for property insurance, material damage and business interruption combined, as well as for liability cover).

Cession limits

The cession limits for reinsurance placements with cross-border reinsurers by cedants transacting anything other than life insurance business remain the same. However, the cession limit percentages will now be calculated based on the total reinsurance premium ceded outside India. Previously, the limits were calculated based on the total reinsurance premium ceded in India and outside India for each insurance segment.

As per the definition set out above, 'cedants' no longer includes reinsurers ceding risk to a retrocessionaire.

Alternative risk transfers

The 2018 regulations define 'alternative risk transfers' as non-traditional structured reinsurance solutions that are tailored to specific needs and the insurer or reinsurer's profile (also called 'financial reinsurance' in life reinsurance business). Indian insurers must submit alternative risk transfer proposals to the IRDAI, which will grant transfers on a case-by-case basis.

Specific reforms for life insurance business

Although the order of preference does not apply to Indian insurers transacting life insurance business, the 2018 regulations require them to use the Indian domestic capacity before offering reinsurance placements to cross-border reinsurers. Life insurers must also obtain prior approval from the IRDAI before entering into reinsurance arrangements with their promoter company or associate or group companies, except where the arrangements are on commercially competitive terms and an arm's-length basis.

Amendments to Branch Office Regulations and Lloyd's India Regulations

For the purpose of opening a foreign reinsurance branch, the Branch Office Regulations and the Lloyd's India Regulations categorised applicants into two categories:

  • Category I – minimum retention is 50% of the applicant's Indian reinsurance business; and
  • Category II – minimum retention is 30% of the applicant's Indian reinsurance business.

The 2018 regulations have done away with Category II. All applicants must maintain at least 50% of their Indian reinsurance business.


The 2018 regulations consolidate the existing regulations for life and general reinsurance business into a uniform set of provisions for reinsurance business in India. There has also been a streamlining of filing requirements and processes. While the 2018 regulations retain the objective of maximising retention within the country, there has been significant reform to the order of preference in allowing foreign reinsurance branches to compete with other Indian reinsurers for reinsurance of general insurance risks. This change appears to have been welcomed by foreign players writing reinsurance business in India.

For further information on this topic please contact Celia Jenkins or Anuj Bahukhandi at Tuli & Co by telephone (+91 11 2464 0906) or email ( or The Tuli & Co website can be accessed at