New Delhi, Feb. 11: General Insurance Corporation, the national reinsurer, is scheduled to meet the Insurance Development Regulatory Authority (IRDA) this week to discuss and plan its reinsurance programme for fiscal 2003-04.
GIC managing director P. Ramanujam told The Telegraph: “We will meet the regulator on Thursday to outline our reinsurance programme for the current year. This will be then approved by the IRDA.”
The reinsurer has already had one-on-one meetings with the four state-owned insurers and approximately eight to nine private general insurance companies. “In the process we have tried to learn their minds, gauge their requirements and discuss their individual business portfolios,” said Ramanujam.This is the second annual meeting that GIC officials will be holding with the regulatory body since the latter was formed in 2000.
Speaking about risk perceptions, Ramanujam said, “Until last year, the insurers were more perturbed about riots, storm, acts of terrorism as the Akshardham temple in Ahmedabad and earthquakes.”
“This year the major focus and concern is over the probable outbreak of war in the Gulf. The possibility of such a war has put industry on alert,” the GIC MD said.
The other serious issue that will be taken up by the reinsurer with the regulator will be to formalise a method to enhance risk retention within the country. Ramanujam said, “It is our endeavour to stop cash outflows from our country as it leads to a huge monetary loss.”
At present, GIC’s net worth is approximately Rs 2,000 crore. According to international standards, an insurer can accept risks up to three times its net worth. This implies that the reinsurer’s risk acceptance can go as high as Rs 6,000 crore.
Ajit Narain, managing director and CEO of Iffco-Tokio General Insurance Company, said: “GIC has been holding such meetings with various insurance companies. It is an effective exercise that helps understand and stay abreast with industry trends. The two-way interaction helps us keep a check and balance.” “It is important for any insurance company to keep a low retention level in the formative years of operation. With time, all insurers should try to strengthen their balance sheets and build reserves,” he added
He indicated that before taking any decision on increasing risk retention within the country, GIC should observe whether the insurance companies are aggressively building their reserves or not.