IRDAI vide Circular dated 19th December, 2022 has issued clarification regarding Reinsurance Treaty Agreements covering Fire and Engineering Lines of Business. The Authority acknowledges that every Reinsurer should have the freedom to price its reinsurance product and freely negotiate terms of trade with its counterparties i.e. ‘Cedants’ (Insurers).
However, terms of trade shall not be an impediment on the freedom of the ‘Cedant’ (Insurer) to freely compete, negotiate, price and assume risks via its own contracts of insurance with its clients i.e. ‘insurance buyers’. The Authority hereby advises all Non-life insurers and reinsurers to ensure that IIB published broad-occupancy market average burning costs rates for Fire and Engineering risks are not embedded as minimum rates within Reinsurance Treaty Agreements applying to the Indian Market for the risks commencing on and after 1st April 2023.