IRDAI issued a notification having reference number IRDAI/RI/6/213/2025 dated February 24, 2025, titled “Obligatory Cession for the financial year 2025-26” (“Notification”).
The key highlights of the Notification are as under:
- The Notification applies to Indian Re-insurers and other insurers as per Section 101A of the Insurance Act, 1938.
- The percentage cession of the sum insured on each General Insurance Policy to be reinsured with Indian Re-insurer(s) is 4% for the financial year 2025-2026, excluding terrorism and Nuclear pool premiums, with all obligatory cessions placed solely with GIC Re.
- The Indian Re-insurer may require immediate notice from the ceding insurer for any cession exceeding specified limits during the period from 1st April 2025 to 31st March 2026, with no sum insured limit on the cessions.
- The commission on obligatory cession for various insurance classes is as follows:
5% for Motor TP and Oil & Energy, 10% for Group Health, 7.5% for Crop Insurance, average terms for Aviation, and 15% for all other classes, with additional commission negotiable between the Indian Re-insurer and ceding insurer.
The Indian Re-insurer will share the profit commission 50:50 with the ceding insurer, based on the performance and surplus of the obligatory portfolio, factoring in incurred loss %, management expenses (2%), profit (5%), and commission (12.5%) over three financial years.
A copy of the Notification is attached for your ready reference.
Source category: IRDAI
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