Insurance regulator IRDAI on Thursday said it has approved a series of amendments to the reinsurance regulations with an aim to promote a favourable business environment and attract more reinsurers to establish operations in India.

The regulator has halved the minimum capital requirement for foreign reinsurance branches (FRBs) from Rs 100 crore to Rs 50 crore, with a provision to repatriate any excess capital.

The other changes include streamlining the order of preference to four levels from the earlier six with Indian reinsurers leading the order.

“The key focus areas of these amendments revolve around several crucial aspects. Firstly, there is a concerted effort to increase the overall capacity of the reinsurance sector, which can help accommodate growing demand and manage larger risks.

Additionally, these amendments seek to enhance technical expertise within the industry, fostering an environment of excellence and innovation,” IRDAI said in a statement.

“Another vital aspect is the reduction of compliance burden on various entities operating in the sector, allowing them to navigate regulatory landscape more efficiently,” the statement said.

The IRDAI said that by working in tandem with the International Financial Services Centres Authority (IFSCA), it aims to cultivate an environment conducive to the growth of reinsurance activities.

Besides Lloyd’s India and its service companies, there are 10 FRBs in India including leading players such as Munich Re, Swiss Re and Allianz Axa. GIC Re is the largest reinsurer in the domestic reinsurance market in India.

The reinsurance market has shown significant signs of hardening during the last few years with 2023 seeing unprecedented hardening and market analysts anticipate the trend to continue for the next couple of years on the back of a shift in perception of climate change and potential losses.