Ministry : Insurance Regulatory And Development Authority (Not Applicable)
Part III-Section 4
Subject : Extra Ordinary
Overview [Obligatory Cession Notification for FY 2025-26]
This notification from the Insurance Regulatory and Development Authority of India (IRDAI) mandates the reinsurance cession requirements for Indian insurers for the financial year 2025-26, specifying key percentages and terms under Section 101A of the Insurance Act, 1938.
Key Points
- Applicability: Mandatory for all Indian re-insurers and insurers under Section 101A of the Insurance Act, 1938.
- Cession Percentage: 4% of the sum insured for general insurance policies (April 1, 2025 – March 31, 2026), excluding terrorism premiums and nuclear pool premiums.
- Cession Destination: Entire obligatory cession must be placed with General Insurance Corporation of India (GIC Re).
- Commission Rates: Minimum commissions vary by class—5% for Motor TP and Oil & Energy, 10% for Group Health, 7.50% for Crop, average for Aviation, and 15% for all other classes.
- Profit Sharing: 50:50 profit commission sharing between ceding insurer and Indian Re-insurer based on portfolio performance, after deducting incurred loss, management expenses (2%), profit (5%), and commission (12.5%).
Summary [Obligatory Cession Notification for FY 2025-26]
The IRDAI notification mandates a 4% obligatory reinsurance cession for general insurance policies effective from April 2025 to March 2026, to be placed exclusively with GIC Re. It outlines sector-specific minimum commission rates and a 50:50 profit-sharing formula tied to portfolio performance, aiming to strengthen the reinsurance framework and stability of the Indian insurance sector.
