Obligatory Cession for the financial year 2023-24

IRDAI vide Circular ref no. F. No. IRDAI/RI/1/189/2023 dated January 30, 2023 has notified obligatory cession for the financial year 2023-24. . The notification shall be applicable to Indian Re-insurers and other applicable insurers as per the provision of Section 101A of the Insurance Act, 1938.

The major highlights of the notification are:

1. Percentage of Cession:

• The percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian Re-insurer(s) shall be 4% (four percent) in respect of insurance attaching during the FY 23-24 (except the terrorism premium and premium ceded to Nuclear pool, wherein it would be ‘NIL’).

· The entire Obligatory Cession is to be placed with General Insurance Corporation of India (GIC Re) only.

2. Terms & Conditions:

a) Notice of information on cession:

i. There would be no limit on sum insured applicable for the cessions made during FY 23-24

ii. Indian Re-insurer may require the ceding insurer to give immediate notice of underwriting information of any cession exceeding an amount as specified by the former.

iii. Ceding insurer shall inform the Indian Re-insurer at all times whenever the cession exceeds such specified limits

b) Commission and Profit Commission

Percentage of Commission on obligatory cession for different classes of business and percentage of profit commission between indian Re-insurers and ceding insurers shall be as prescribed

Source category: IRDAI

Attachments

• /2023/153_Obligatory_Cession_for_the_financial_year_2023-24.pdf