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Industry Specific - Insurance Central Insurance Regulatory Development Authority Insurance Act, 1938

Obligatory Cession for the financial year 2024-25

16-Feb-2024 | F. No IRDAI/RI/3/197/2024

IRDAI has issued a Notification to Obligatory Cession for the financial year 2024-25. The key highlights are:

Applicability: This notification applies to Indian Re-insurers and other applicable insurers as per the provisions of Section 101A of the Insurance Act, 1938.

Sum Insured Limit: There is no limit on the sum insured applicable for the cessions made during the period from 1st April, 2024, to 31st March, 2025. However, Indian Re-insurers may require ceding insurers to provide immediate notice of underwriting information for any cession exceeding a specified amount.

Profit Sharing: The Indian Re-insurer shall share the profit commission with the ceding insurer on a 50:50 basis. This profit commission is based on the performance and surplus of the total obligatory portfolio of the ceding insurer, considering factors such as incurred loss % (calculated at the end of 3 financial years), management expenses at 2%, profit at 5%, and commission at 12.5%.

For detailed information, please refer to the attached Notification.

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