Reinsurance Revolution: IRDAI Greenlights India's First Private Player

In a historic move, the Insurance Regulatory and Development Authority of India (IRDAI) has given its approval to Valueattics Reinsurance Ltd, opening the door to the first private-sector reinsurer in India. The decision puts an end to the long-standing monopoly of the public sector in the reinsurance business, dominated chiefly by General Insurance Corporation of India (GIC Re).

 

Highlights:

 

Historic Approval: Prem Watsa's Fairfax group and Kamlesh Goyal-backed Valueattics Reinsurance has been granted the R2 license, making it the first private reinsurer following GIC Re.

 

Competition and Diversification: The approval is likely to bring about competition and diversification in the reinsurance business, improving the overall scenario of the Indian insurance sector.

 

Initial Capital: The business will start operations with an initial paid-up capital of Rs 200-210 crore, utilizing knowledge from Fairfax's international reinsurance operations.

 

Future Prospects: Future investment is expected to be high, considering the promoters' high investment in other insurance businesses such as Go Digit General and Life Insurance.

 

Regulatory Framework: The sanction comes after a three-step regulatory procedure laid down by IRDAI, highlighting the importance of sufficient capital and technical skills in the reinsurance business.

 

Source: MoneyControl, CNBC TV18, Business Standard