Insurance Law: Reinsurance companies can now open branches in India

MUMBAI: Reinsurance companies such as Munich Re and Swiss Re can open branches in India after the Rajya Sabha on Thursday passed the Insurance Laws (Amendment) Bill, 2015.

Entry of reinsurance companies into the Indian market will bring in knowledge and expertise together with underwriting capacities. Large reinsurance companies are present in India, but most of them, including Munich Re, Swiss Re and Hannover Re, operate as service companies in India. Some like Scor Re operate through representative offices.

The Insurance Regulatory and Development Authority currently does not regulate these reinsurers. The new policy does not specify capital requirement for these companies to open branches in the country; the only prescription is that parent reinsurance companies should have net worth of Rs 5,000 crore.

After the amendment, the Irda will formulate norms to regulate companies that open branches in the country. India already allows up to 26% foreign investment in reinsurance companies, but none of the global majors set up a joint venture in the country.