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IRDAI Cross Border Rinsurers Guidelines

General Overview – IFSCA

General Overview – IFSCA
Definition of 'Cross Border Reinsurer'
Eligibility Criteria for Cross Border Reinsurers (CBR’s)
Filing Reference Number (FRN) Registration for Cross Border Reinsurers (CBRs)
How to apply for FRN
Validity of FRN
Minimum Rating of CBRs
Cession Limits with Cross Border Reinsurers (CBR’s)
FRN Auto Renewal Facility (Introduced first time in Jan 2023 guidelines)
FRN Renewal Process for those CBR who does not qualify for Auto Renewal

General Overview – IFSCA

IRDAI has issued new guidelines on 3rd January 2023 with the objective of simplifying the process and taking steps towards ease of doing business.

Definition of 'Cross Border Reinsurer'

‘Cross Border Re-insurer’, hereinafter called by acronym ‘CBR’, means a foreign re-insurer including Lloyd’s Syndicates, whose place of business is established outside India and which is supervised by its home country regulator. Cross Border Re-insurer includes:

Parent or Group companies of the FRBs;
Parent or Group companies of the IIOs (International Finance Service Centre Insurance Offices (IIO’s)

Eligibility Criteria for Cross Border Reinsurers (CBR’s)

1. No Indian Insurer shall place its Re-insurance business with any CBR, unless it satisfies the following eligibility criteria:

The CBR is an insurance or Re-insurance entity in its home country, duly authorized by its home country regulator to transact re-insurance business during the immediate past three continuous years;
The CBR has a credit rating of at least BBB from Standard & Poor or equivalent rating from an international rating agency during the immediate past three continuous years;
The home country of the CBR has signed Double Taxation Avoidance Agreement with India;
The CBR has minimum solvency margin or capital adequacy, as specified by the home country regulator, during the immediate past three continuous years;
The past claims settlement experience of the CBR is found to be satisfactory;
Any other requirements as stipulated by the Authority from time to time.

2. Reinsurance placements with a CBR, not fulfilling the above stated eligibility criteria shall require prior approval of the Authority.
Reinsurance placements with any International Pool or Risk sharing arrangement having CBRs as members, participants or administrators shall also require prior approval of the Authority.

3. The Authority may stipulate norms for relaxations of these criteria and limits of cessions to a CBR under Regulation 6 along with operational procedures for filing CBR information, through guidelines issued from time to time.

4.To maximize retention in India and to increase domestic capacity, the Authority may undertake review of the business underwritten, claims experience and lines of support given by a CBR, and based on the review, the Authority may stipulate such conditions as may be considered necessary to achieve the stated objectives.

Filing Reference Number (FRN) Registration for Cross Border Reinsurers (CBRs)

What is FRN

IRDAI started issuing Unique Identification Number (UIN) for Cross Border Reinsurers (CBR) from financial year 2012-13 having issued the guidelines for the same in January 2012. These guidelines were revised in Jan,2016, Jan 2021 and subsequently replaced with new guidelines on 3rd January 2023

UIN is now replaced with Filing Reference Number (FRN) to CBR’s

How to apply for FRN

Application for FRN needs to be made through sponsor insurer in India in a prescribed format as per IRDAI Guidelines Ref: (IRDAI/REIN/GDL/MISC/2/1/2023 January 3, 2023)

CBRs will need to find a sponsor insurer in India who will process the application on their behalf.
Essentially the process is similar to the financial year 2022-23 whereby, allotment of new FRN to CBRs would be as per extant regulations i.e., filing of an online application with the Authority by the insurer, who wish to place re-insurance with the CBR, for allotment of FRN providing details as per the specified format.
The application form has been modified to include an additional requirement of certification by an authorised Signatory of CBR that the CBR has sent the confirmation of premium receipt to all Indian insurers and if not, the reason for the same.

Validity of FRN

FRN is valid for each financial year commencing from 1st April to 31st March

Minimum Rating of CBRs

Minimum Rating of CBR’s while quoting for Indian Risks

CBRs need to have a minimum credit of A or above from Standard & Poor’s or equivalent rating from any other International Rating Agency to quote for Indian risks

Minimum Rating of CBR’s for participation on Indian Risks

The CBR has a credit rating of at least BBB from Standard & Poor or equivalent rating from an international rating agency during the immediate past three continuous years

Cession Limits with Cross Border Reinsurers (CBR’s)

1. Re-insurance placements with CBRs by the cedants transacting other than life insurance business shall be subject to the following overall cession limits during a financial year.

a. Rating of the CBR as per Standard & Poor or equivalent. Maximum overall cession limits allowed per CBR;

i.	Greater than A+	20%
ii.	Greater than BBB+ and up to and including A+	15%
iii.	BBB & BBB+	10%

Explanation: The above percentages are to be calculated on the total reinsurance premium ceded out-side India.

No placement exceeding the aforesaid limits shall be made unless prior approval of the Authority is obtained.

Provided that the cession limits as above shall not be applicable to cedants which place total reinsurance premiums outside India up to rupees seventy-five crore (INR 750 million) during a financial year and the placements are with CBRs having a rating of BBB+ and above.

FRN Auto Renewal Facility (Introduced first time in Jan 2023 guidelines)

New facility of Auto Generation of the FRN for the financial year 2023-24 by Insurers in India

The authority has introduced a new facility of Auto Generation of the FRN for the financial year 2023-24 and thereafter, according to which an Insurer can generate FRNs on its own for the CBRs who qualify for Auto-renewal.

a)To qualify for Auto-renewal of a CBR, the Insurer shall ensure that –
- Credit rating of the CBR shall not be less than ‘Standard & Poor's A- or equivalent. The latest credit rating of the CBR shall not be prior to 12 months from the date of application for Auto-renewal;
- CBR has been allotted FRN under ‘Eligible CBR’ by the Authority in the financial year preceding to the financial year for which application is made;
- necessary and latest information is filed and
- Such CBR meets the other requirements as per Reg. 4 (1) of IRDAI (Reinsurance) Regulations, 2018 to qualify as ‘Eligible CBR’
Reg. 4 (1) of IRDAI (Reinsurance) Regulations, 2018 reproduced below:

No Indian Insurer shall place its reinsurance business with any CBR unless it satisfies the following eligibility criteria:
- A.The CBR is an insurance or Reinsurance entity in its home country duly authorised by its home country regulator to transact reinsurance business during the immediate past three continuous years.
- The CBR has a credit rating of at least BBB from Standard & Poor or equivalent rating from any international rating agency during the immediate past three continuous years.
- The home country of the CBR has signed Double Taxation Avoidance agreement with India.
- The CBR has minimum solvency margin or capital adequacy, as specified by the home country regulator during the immediate past three continuous years.
- The past claims settlement experience of the CBR is found to be satisfactory.
- Any other requirements as stipulated by the Authority from time to time.
The auto-renewal facility is available for three consecutive financial years for a CBR. After three financial years, fresh application has to be submitted by the insurer through CBR portal.
It to be noted that for insurers to avail the benefit of auto renewal facility on behalf of CBR’s, it is expected that insurers will still need the completion of forms annually and supporting declarations by CBR’s
The CBRs, who do not qualify for Auto-renewal, shall have to obtain FRN on annual basis as per existing process.

While doing Auto-renewal process, if the applicant Insurer notices that CBR does not meet the requirements as mentioned above, it shall file the application for renewal as per the process stated in para below.

FRN Renewal Process for those CBR who does not qualify for Auto Renewal

Process for Renewal of FRN for the CBR, who does not qualify for Auto-renewal would be as under:

On completion of every financial year, any insurer may make an application for Renewal of FRN through the CBR portal.
The Authority, on examination of submissions made by the insurer, may allot system generated FRN.
The validity of renewed FRN allotted to such CBRs shall be for one financial year (1st April to 31st March)