Insurance Regulatory and Development Authority
Ref: IRDAI/REIN/GDL/MISC/2/1/2023 Dated: January 3, 2023
The CEOs of All Insurers
Subject: Guidelines on issuance of File Reference Numbers (FRN) to Cross Border Reinsurers
A. The Indian Insurance Industry is poised for growth and the Authority has been taking various steps to reduce the protection gap and develop the Insurance industry. These steps are towards ease of doing business and would also facilitate further development of the insurance industry.
B. The availability of well-developed reinsurance market ensures that insurance products are available at reasonable prices to the policyholders. The Cross Border Re-insurers (CBRs) play a significant role in reinsurance market in providing reinsurance support/capacity to the Insurers. The insurer has to ensure that CBRs meet, interalia, rating requirements as per IRDAI (Reinsurance) Regulations, 2018 and shall have File Reference Number (FRN), before placing any business with them. At present, such FRNs are allotted on annual basis by the Authority.
C. 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, it has been decided to consider Auto-renewal of FRNs by the Insurer itself, provided such CBRs meet the required criteria as specified hereafter.
D. The Authority in exercise of the powers conferred under Sec. 34 (1) of the Insurance Act, 1938 read with Reg. 4 (3) and 12 (3) of the IRDAI (Re-insurance) Regulations, 2018, makes the following Guidelines.
E. These Guidelines aim to streamline the regulatory process with respect to cross border reinsurers and will supersede existing Guidelines No. IRDA/R1/GDL/MISC/015/01/2021 dated 22th January, 2021, on CBRs.
2. Allotment of FRN to CBRs
A) Application for New FRN:
i. The CBRs, who meet the eligibility criteria as per the extant regulations, will qualify as ‘Eligible CBRs’. The CBRs, who do not meet the eligibility criteria, are regarded as ‘Non-Eligible CBR’;
ii. The insurers, who wish to place re-insurance business with CBR, shall file an online application with the Authority at https://cbr.irdai.gov.in/login.aspx (CBR Portal) in the form as specified at Annexure – 1, for allotment of FRN to CBRs under the category of either ‘Eligible CBR’ or ‘Non-Eligible CBR’, as the case may be;
iii. The Authority may raise any other requirements, if necessary, for processing of such application while allotting FRN to CBR. After examination of submissions made by the insurer, the Authority allots system generated FRN to the CBR;
iv. Filing of application for allotment of FRN to CBR shall commensurate with Reinsurance programme of the insurer, as per extant regulations.
B) Application for Renewal of FRN:
The Insurer can generate FRNs on their own for the CBRs who qualify for Auto-renewal. The CBRs, who do not qualify for Auto-renewal, shall have to obtain FRN on annual basis. The detailed procedure is as under:
i. Process for ‘Auto – Renewal’ of FRN:
a) To qualify for Auto-renewal of a CBR, the Insurer shall ensure that –
(i) 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;
(ii) 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;
(iii) necessary and latest information is filed and
(iv) Such CBR meets the other requirements as per Reg. 4 (1) of IRDAI (Reinsurance) Regulations, 2018 to qualify as ‘Eligible CBR’
b) While doing Auto-renewal process, if the applicant Insurer notices that CBR does not meet the requirements as per (a) above, it shall file the application for renewal as per the process stated in para B(ii) below.
c) The portal would be available for Auto-renewal for the current financial year and would also be available three months in advance for the next financial year.
d) 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.
ii. Process for Renewal of FRN for the CBR, who does not qualify for Auto-renewal:
a) On completion of every financial year, any insurer may make an application for Renewal of FRN through the CBR portal.
b) The Authority, on examination of submissions made by the insurer, may allot system generated FRN.
c) The validity of renewed FRN allotted to such CBRs shall be for one financial year.
3. General Provisions:
i. No insurer shall place re-insurance business with any CBR without valid FRN.
ii. The Authority may allot country wise separate FRN to the CBR.
iii. The facility for Auto-renewal would be available for FY 2023-24 and thereafter.
iv. Once FRN is allotted for a particular CBR, the same shall be used by other insurer for placement of reinsurance business with such CBRs.
v. The Insurer, while placing reinsurance business with CBR (who has valid FRN), shall satisfy itself and is solely responsible to ensure that the CBR meets the eligible conditions as per the extant regulations.
vi. 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.
vii. The insurer, within thirty days of commencement of the financial year, shall submit a certificate of compliance (Annexure-2) to the Authority confirming that all the re-insurance placements are made with the CBRs who comply with the eligibility criteria or with those CBRs prescribed in these guidelines. This certificate is to be filed with the Authority along with submissions required to be made under Reg. 3 (3) (A) (c) of the IRDAI (Re-insurance) Regulations, 2018.
viii. Notwithstanding anything contained in these guidelines, the insurer shall comply with the Insurance Act,1938 and other applicable regulations issued by the Authority from time to time.
These Guidelines shall come into force from the date of the issue.
A Ramana Rao
Chief General Manager (Re-insurance)