India Wants Control Over, But Won't Limit, Reinsurance.

India's Insurance Regulatory and Development Authority has said there will be no limit on the extent of overseas reinsurance transactions by life insurers, though they would generally be expected to maximize retention within India.

At the same time, the authority has ordained that life insurers will have to obtain approval from the regulator before entering reinsurance treaties with parent, group or associated companies abroad. The idea is to make sure that local companies aren't used as "fronts" by foreign companies that partially own Indian insurers.

In its "IRDA (Life Insurance-Reinsurance) Regulations 2000," the regulator has said it will consider requests for reinsurance treaties with overseas groups or associated companies after it is satisfied that the arrangement has been entered "on terms commercially competitive in the market."

Companies such as American International Group Inc. and Germany's Allianz AG Holding will have to compete with other foreign insurers to obtain reinsurance business from Indian life insurance companies in which they have equity stakes.

Unlike nonlife companies, which are required to cede 20% of their business to the Indian Re-insurer (formerly General Insurance Corporation of India), there is no mandatory cession for life insurers.

The Indian Re-insurer has no experience in life business and there is no other domestic reinsurer. None of the international reinsurance companies has come forward to set up a domestic reinsurer with an Indian partner.

All life insurers will have to draw up an independent reinsurance program and submit it to IRDA at least 45 days before the beginning of each financial year. The profile must include names of all reinsurers with which the insurer proposes to place business and has to be certified by an appointed actuary.