IRDAI's new guidelines to allow auto-renewal of FRNs by Cross Border Insurers

According to Insurance experts, the amendments shall facilitate the insurer for generating the File Reference Number (FRN) for qualified Cross Border Reinsurers on their own for consecutive three years, which will minimise the administration process and delay in generation of FRN. Read here to know more about the new development.

Sheersh Kapoor
  • Published On Jan 5, 2023 at 07:50 AM IST
Read by: 100 Industry Professionals
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The Insurance Regulatory Development Authority of India (IRDAI) has released revised guidelines on issuance of File Reference Numbers (FRN) to Cross Border Reinsurers (CBRs).



In order to conduct reinsurance arrangements with Global reinsurers, which do not have an office in India (called "Cross border Reinsurers or CBR"), the IRDAI (Reinsurance) Regulations 2018 specifies the terms and conditions.

One of the requirements under the old guidelines was the allotment of File Reference Number (FRN) for every CBR by IRDAI, which has validity period of year after which the FRN has to be renewed.

After considering the feedback and also inputs from the Task Force on Non-life Insurers and Reinsurers and the Working group on ease of doing business, the regulator has decided to consider Auto-renewal of FRNs by the Insurer itself.

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According to experts, FRN is an important tool for CBRs as it helps in ensuring accurate and efficient tracking and management of reinsurance contracts and claims, and supports regulatory compliance.

The amendments shall facilitate the insurer for generating the FRN for qualified CBR on their own for consecutive three years, which will minimise the administration process and delay in generation of FRN, explained Sharad Mathur, Managing Director & CEO, Universal Sompo General Insurance.

Further, IRDAI has introduced amendment as “The Insurer shall place all the re-insurance business placements made with the ‘Non-Eligible’ CBRs before its Board of Directors for their approval /ratification and shall file within fifteen days the certified copy of such resolution with the Authority.

The amendment clearly implies that the Authority is encouraging and motivating insurers to place reinsurance business with eligible CBRs, he said.

This is a tactical move by the Regulator aimed at delegation of powers in a controlled framework, while fixing responsibility for compliance with the conditions specified on the insurers, said Conjeevaram Baradhwaj, Executive Vice President (Legal & Compliance) & Company Secretary at Future Generali India Life Insurance.

He explained that in the revised Guidelines on CBR issued on 3 January 2023, IRDAI has enabled a process of auto renewal and generation of FRNs by Insurers for those CBRs who fulfil the necessary conditions.

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"These conditions ensure that auto-renewal of reinsurance arrangements are allowed only for CBRs who hold a good track record, including fulfilling regulatory solvency requirements in home country, minimum Credit Rating of A- during the last 12 months and Claims settlement track record," he said.

As additional risk control mitigation from a regulatory standpoint, the auto renewal is allowed only for 3 consecutive financial years, after which fresh application to be made. This is another step taken by IRDAI aimed at ease of doing business in the insurance industry, he added.

According to the IRDAI notification, these guidelines aim to streamline the regulatory process with respect to cross border reinsurers and will supersede existing guidelines dated 22th January, 2021, on CBRs.

  • Published On Jan 5, 2023 at 07:50 AM IST
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