Insurers should cut obligatory cession losses: GIC

MUMBAI: Worried over huge losses from the compulsory business, the General Insurance Corporation of India, or GIC Re, has asked non-life insurance companies to take steps to cut losses on this portion. Since 2007, when the insurance regulator detariffed rates on various seg

ments, GIC’s accumulated loss stands at Rs 2,500 crore. “We have to take steps to bring down our losses in the obligatory cession,” said AK Roy, chairman and managing director, GIC Re.

“We have made a loss of Rs2,500 crore in the last four-five years. We have to find ways to make it sustainable.” As per law, a primary insurer has to place 10% of risk with the designated national reinsurer, GIC.

This is to retain the reinsurance business in the country. With GIC re-looking at the portfolio, it will become important for companies to concentrate on the underwriting profits and, therefore, raise rates.

Reinsurance rates have gone up by 10-15% in most cases based on the treaty experience.