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ANNUAL REPORT 2011-12
Obligatory cessions received by GIC
I.4.3.11 For the year 2012-13, the obligatory cessions
are retained at 10 per cent as applicable for 2011-12.
The limit of cession in respect of sum insured for
various lines of business continued as prescribed for
the year 2011-12. The details of such prescriptions are
indicated below:
The percentage cessions of the sum insured on
each General Insurance Policy to be reinsured
with the Indian Reinsurer shall continue to be 10
per cent in respect of insurances attaching during
the year 1 st April, 2012 to 31 st March, 2013.
Section 101A (4) provides that a notification under
sub-section (2) of Section 101A of the Insurance
Act, 1938 may also specify the terms and
conditions in respect of any business of
reinsurance required to be transacted under this
section and such terms and conditions shall be
binding on Indian reinsurers and other reinsurers.
The Authority, in consultation with the Advisory
Committee constituted under section 101B of the
Act, hereby specifi es the percentage and terms
and conditions for the reinsurance cessions to the
“Indian Reinsurer” in compliance with section
101A of the Act.
Cross Border Reinsurers
I.4.3.12 The Authority, under the powers granted to it
under Section 114 (zd) of the Insurance Act, 1938 has
issued guidelines on the Cross Border Reinsurers and
these guidelines will be effective from 1 st April, 2012.
The guidelines are applicable to those “Cross Border
Reinsurers” who do not have any physical presence
in India and do reinsurance business with Indian
Insurance Companies. All the reinsurers are required
to provide information as per format prescribed by the
Authority along with their audited annual report. It was
mandated to all the insurers and reinsurer that the
cross border reinsurers should be legal entities in their
home country and are regulated and supervised by
their home supervisors. The solvency of the reinsurer
should not be lower than standards prescribed for
Indian insurers and their fi nancial strength, quality of
management and adequacy of their technical reserving
methodologies should be monitored by their home
Supervisory Authority. The Authority shall register
foreign fi rms domiciled in countries who have signed
Double Taxation Avoidance Agreements (DTAA) to Tax
Information Exchange Agreement with India as per list
maintained with Income Tax Department, Government
of India and will provide a Unique Identification Number
(UIN) to these reinsurers which will be valid for a period
of one year.
I.4.4 INSURANCE POOLS
Terrorism Pool
I.4.4.1 The Indian Market Terrorism Risk Insurance
Pool was formed as an initiative by all the non-life
insurance companies in India in April 2002, after
terrorism cover was withdrawn by international
reinsurers post September 11 terrorist strikes in New
York City in the year 2001. The Pool has thus
completed a decade of successful operations. All
Indian non-life insurance companies and GIC Re are
members of the Pool. GIC Re continues to administer
the Pool. The Pool is applicable to insurance of
terrorism risk covered under property insurance
policies. The Pool offered limit of indemnity of `750
crore per location for terrorism risk cover till 31 st March,
2012. From 1 st April 2012, the limit has been increased
to `1,000 crore per location. Premium rates for
terrorism cover, which were last revised upwards from
1 st April, 2009 after the losses reported from the
Mumbai terrorist attack event of 26 th November, 2008,
have been reduced w.e.f. 1 st April, 2012.
I.4.4.2 The Pool’s premium income has grown from
`389 crore in 2010-11 to `458 crore in 2011-12, an
increase by 17.75 per cent. The claim paid by the Pool
during 2011-12 is `41.5 crore, which includes balance
payment of losses arising out of the Mumbai terrorist
attack on 26 th November, 2008. The Pool has settled
all losses arising out of the Mumbai terrorist attack for
a total amount of `377 crore. No major losses were
reported to the Pool during 2011-12.
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