Guidelines on issuance of File Reference Numbers (FRN) to Cross Border Reinsurers (CBR)

IRDAI vide reference number IRDAI/REIN/GDL/MISC/2/1/2023 dated January 3, 2022 has issued “Guidelines on issuance of File Reference Numbers (FRN) to Cross Border Reinsurers (CBR)” [Guidelines].

Background

Insurer have to ensure that CBRs meet rating requirements as per IRDAI (Reinsurance) Regulations, 2018 [Regulations] and have FRN, before placing any business with them. At present, such FRNs are allotted on annual basis by the Authority. The Authority on the basis of inputs from the Task Force on Non-life Insurers and Reinsurers and the Working group on ease of doing business, has decided to consider auto-renewal of FRNs by the Insurer provided the criteria by the CBRs as stipulated in the Guidelines.

Major highlights of the Guidelines are as follows:

• Allotment of FRN to CBRs
• CBR’s shall meet the eligibility criteria as per the extant regulation shall qualify as ‘Eligible CBRs’ Those not meeting the criteria, are regarded as ‘Non-Eligible CBR’s
• Insurers (placing re-insurance business with CBR) shall file an online application with the Authority in the format as specified (Annexure -1)
• A system generated FRN would be allotted by the Authority to CBR post examination of submission
• Filing of application for allotment of FRN to CBR shall commensurate with Re-insurance programme of the insurer
• Application for Renewal of FRN
• Insurers are permitted to generate FRN on their own for the CBR’s who qualify for Auto-renewal in accordance with the following stated criteria:
• Credit rating of the CBR shall not be less than ‘Standard & Poor’s A- or equivalent Latest credit rating of the CBR shall not be prior to 12 months from the date of application for Auto-renewal.
• FRN under ‘Eligible CBR’ has been allotted by the Authority in the financial year (FY) preceding to the FY for which application is made
• Necessary and latest information is filed
• Other requirements as per Reg. 4 (1) of IRDAI (Reinsurance) Regulations, 2018 pertaining to the eligibility criteria of placing business CBR shall be complied with
• CBRs, who do not qualify for Auto-renewal, shall have to obtain FRN on annual basis based on application based mechanism
• Auto-renewal facility is available for 3 FY and after that fresh application has to be submitted by the insurer through CBR portal
• Application based Renewal (CBR who does not qualify for Auto-renewal)
• Insurer may make an application for Renewal of FRN through the CBR portal for each FY
• Other conditions
• No insurer shall place re-insurance business with any CBR without valid FRN
• Authority may allot country wise separate FRN to the CBR
• Facility for Auto-renewal would be available for FY 2023-24 and thereafter
• Once FRN is allotted for a particular CBR, the same shall be used by other insurer for placement of reinsurance business with such CBRs.
• Insurer shall satisfy itself and is solely responsible to ensure that the CBR meets the eligible conditions as per the Regulations
• Business placements made with the ‘Non-Eligible’ CBRs by Insurer shall be placed before Board of Directors for their approval / ratification and certified copy of resolution to be filled with the Authority within 15 days
• Certificate of compliance (Annexure-2) shall be submitted to the Authority by the Insurer within 30 days of commencement of the FY confirming that all the re-insurance placements are made with the CBRs who comply with the eligibility criteria or with those CBRs prescribed in these Guidelines.

These Guidelines shall come into force from the date of the issue and will supersede existing Guidelines No. IRDA/R1/GDL/MISC/015/01/2021 dated January 22, 2021, on CBRs.

Source category: IRDAI

Attachments

• /2023/139_Guidelines_on_issuance_of_FRNs_to_Cross_Border_Reinsurers_03102023.pdf