IRDAI – Gazette notification on obligatory cession for reinsurers for the Financial Year 2026-27

The Insurance Regulatory and Development Authority of India ( “IRDAI” ) has issued a gazette notification on Obligatory Cession for the financial year 2026-27 on April 17, 2024, bearing reference number IRDAI/RI/3/217/2026, dated April 09, 2026 (“ Notification ”).

The key highlights of the Notification are as follows:

• Applicability: The notification is applicable to all Indian re-insurers and other eligible insurers under Section 101A of the Insurance Act, 1938.
• Percentage of Cession:
• The percentage cession of the sum insured on each General Insurance Policy shall be 4% for insurance attaching during the financial year 1 April 2026 to 31 March 2027.
• The obligatory cession shall be NIL in respect of terrorism premium and premium ceded to the Nuclear Pool.
• The entire obligatory cession shall be placed exclusively with General Insurance Corporation of India (GIC Re).
• Terms & Conditions:
• Notice of information on cession: There shall be no limit on the sum insured applicable for obligatory cessions made during the period 1 April 2026 to 31 March 2027; however, the Indian Re-insurer may prescribe threshold limits, and the ceding insurer shall provide immediate underwriting information and intimation whenever a cession exceeds such specified limits.
• Commission: Commission on obligatory cession for different classes of business shall be as follows:

Commission over and above, can be as mutually agreed between Indian Re-insurer(s) and the ceding insurer.

• Profit commission : This shall be shared on a 50:50 basis between the Indian Re-insurer and the ceding insurer based on the performance and surplus of the total obligatory portfolio of the ceding insurer, after factoring the following:

A copy of the Notification is attached herewith for your ready reference.

Source category: IRDAI

Attachments

• Gazette Notification – Obligatory Cession for the financial year 2026-27