Jio-Allianz, Fairfax-backed Valueattics Re set to shake up India's Rs 50,000-cr reinsurance market
Jio-Allianz
and Valueattics Re-a JV between Fairfax's Prem Watsa and
Kamesh Goyal
's Oben Ventures-enter the market, challenging the dominance of state-run
GIC Re
in the country's ₹50,000-crore reinsurance business.
GIC Re currently has a 51% market share, while the rest is distributed among 11 foreign reinsurance branches. On Friday,
Jio Financial Services
(JFSL) and
Allianz Group
(Allianz), through its wholly owned subsidiary Allianz Europe BV, announced they have entered into a binding agreement to form a 50:50 domestic reinsurance joint venture in the insurance market in India.
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The two companies also entered into a non-binding agreement for setting up equally owned joint ventures for both general and life insurance businesses in India.
ET Bureau
Regulatory norms such as mandatory cession and order of preference could benefit the new entrants, giving them an edge over other reinsurers. Regulations mandate Indian insurers to cede 4% of each policy to GIC Re.
This would be Allianz's third reinsurance entity after its existing branches under the Foreign Reinsurer Branch (FRB) and International Financial Services Centre Insurance Office (IIO) regimes. This proposed company would be an India-incorporated entity with a paid-up capital of a minimum ₹200 crore.
While the other two reinsurance entities are focused on speciality reinsurance and certain lines of risks, the third entity, which will be an Indian reinsurer would have a standalone balance sheet and the flexibility to do treaty and facultative reinsurance.
GIC Re, the national reinsurer, has long been the anchor of the domestic reinsurance market. In 2023-24, a total reinsurance premium of ₹62,113 crore was collected by Indian reinsurer GIC Re and foreign reinsurance branches (FRBs). About 81% of this business came from within India, which is ₹50,553 crore. Of this Indian business, GIC Re handled around 51%, while the remaining 49% was done by the foreign reinsurance branches including global reinsurers like Lloyd's.
Reinsurers operating from within India, like Jio-Allianz and
Valueattics Re
could get preferential access over cross-border reinsurers in the order of preference mandated by IRDAI. As per IRDAI guidelines, every Indian general insurer must cede 4% of their sum insured on each policy to GIC Re- the Indian reinsurer under compulsory cession rules.
While GIC enjoys 4% mandatory cession, this is subject to annual review. Also, reinsurers operating from within India, like Jio-Allianz and Valueattics Re, could enjoy preferential access over cross-border reinsurers in the order of preference mandated by IRDAI.
The entry of Jio-Allianz could bring the scale, digital reach, and capital heft of Reliance Industries, while Valueattics Re, headed by Canadian-Indian billionaire Prem Watsa, entered the
Indian reinsurance market
in March this year and is expected to tap into Fairfax's global expertise and balance sheet strength, further accelerating competition in the domestic landscape.
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