Recently an insurance term named, Co-insurance, is creating a lot of waves, making several reasons for unhappiness for lots of companies, like General Insurance Corporation.
Fundamentally, when two companies team up to offer an insurance cover to a client, it is known as co-insurance but maybe such practices are now turning to GIC for reinsurance support for the specific client.
That’s why, with a new development, GIC has proposed to slap riders on such co-insurance practices, which is famous by the term facultative reinsurance. Facultative reinsurance is coverage where a reinsurer evaluates a specific risk on a case-by-case basis.
As a result, there would be no obligation to submit any risks to the reinsurer for the primary insurer, and the reinsurer is free to accept or reject any risks submitted by the primary insurer.
GIC chairman Yogesh Lohiya said in an interview: “All insurers approach GIC for reinsurance support and our risk exposure for every large industrial accounts increase by a very large extent, which, according to prudent norms, is risky. These risks need to be spread out. We will also be limiting our exposure in such accounts. Currently, GIC is trying to come up with a set of guidelines for such co-insurance. Facultative insurance is also being considered as an alternative. Dialogues with insurers are expected to start once the renewal season starts — March onwards.”
However, in a bid to corner larger share of the market, GIC offered heavy discounts on industrial/corporate covers. Even they have asked for discounts from re insurers, so that they cover their own risk.
Now, if you want to understand the nuances of different types of policies and its price, feel free to seek the help of InsuranceMall to select the right products based on your need.
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