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Regulatory blues: India’s 1st private reinsurer mulls licence surrender

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Chennai, July 24: Finding the reinsurance regulations illogical and an uneven playing field for a whopping investment of Rs 500 crore, India’s first private reinsurance company, ITI Reinsurance Ltd (ITI Re) is even ready to surrender its licence, officials said.

ITI Re is promoted by the listed Fortune Financial Services (India) Limited (FFSIL) which in turn is promoted by Sudhir Valia.

“We are willing to surrender our licence if the division of obligatory cession continues to be skewed and other regulations are not suitably changed,” Valia told IANS over phone from Mumbai.

As per IRDAI stipulations, primary insurers can insure with a domestic reinsurer having a credit rating that signifies financial stability for the past three years.

“How can a new company like ours have credit rating for three years,” said R. Raghavan, Chief Operating Officer to IANS.

“The regulation is not only illogical but also anti-competitive,” D. Varadarajan, Supreme Court advocate specialising in company/competition/insurance laws told IANS.

“The primary objective of the regulator is to develop the insurance market in India in an organised manner. But its reinsurance regulation is contrary to that objective,” Varadarajan said.

Varadarajan said Insurance Regulatory and Development Authority of India(IRDAI) issues the licence to operate after proper due diligence.

It beats the logic when IRDAI stipulates three year credit rating for a domestic reinsurer licensed by it after asking the investor to pump in Rs 500 crore start-up capital when the statutory limit is Rs 200 crore, Varadarajan added.

Varadarajan sees no impediment for ITI Re exiting as it has not underwritten any risk till date since it got the licence in December 2016.

Reinsurance is an insurance for primary insurers — those who sells policies to the public.

The main source of business for Indian reinsurers are from two streams — obligatory cession of five per cent by the primary insurers and the remaining 95 per cent market business.

Till the entry of ITI Re and branches of foreign reinsurers, government owned General Insurance Corporation of India (GIC) was the sole reinsurer in India.

With the objective of preventing flight of reinsurance premium overseas and to nurture GIC the Indian primary insurers were initially asked to place compulsorily 30 per cent of their reinsurance business with GIC.

Over the years the obligatory cession got reduced and now it stands at five per cent.

Raghavan and Valia agreed that the fight for the five per cent obligatory cession is between GIC and ITI Re alone and the primary insurers can reinsure with both of them or give the entire five per cent to ITI Re itself.

However, they argued that the playing field is not even as GIC is a dominant player in the domestic market and primary insurers may place in full the obligatory business with GIC, considering their other non-obligatory reinsurance contracts.

“Hence there is a need for the central government/IRDAI to reserve a portion of that in favour of domestic new reinsurers,” Valia said.

Globally, reinsurers earn a premium that is three times their networth.

The Rs 500 crore equity based ITI Re, seeks a reservation of Rs 1,500 crore of obligatory cession to itself.

Raghavan said the Indian reinsurance market is Rs 28,900 crore of which almost Rs 10,000 crore goes to overseas reinsurers and insurance pools resulting in outgo of foreign exchange.

According to Raghavan, many primary insurers, particularly with overseas partners, display reluctance in placing business with new entrants, seeking shelter under their internal risks transfer guidelines.

“Unless a nurturing policy for new entrants is implemented for obligatory cessions, building up of domestic reinsurance capacity will continue to be a mirage that it has been for last 17 years or so,” Raghavan said.

He also added that the government/IRDAI should remove the three year credit rating criteria for new reinsurers to get business from primary insurers.

(Venkatachari Jagannathan can be contacted at [email protected])

by Venkatachari Jagannathan

IANS

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North Eeast Border Row: Protesters block highway to Mizoram for 2nd day

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Assam Mizoram Border Row

Silchar/Aizawl: The Assam-Mizoram border trouble continued for the second day on Thursday as the agitators in southern Assam refused to withdraw their blockade of National Highway 306, the lifeline of Mizoram, demanding the withdrawal of its security personnel from Assam’s territory.

Assam’s Additional Director General of Police, Law and Order, Gyanendra Pratap Singh, who is camping in southern Assam since Wednesday, held a series of meetings to normalise the situation but despite his appeal, over a hundred people refused to withdraw their blockade at Lailapur, leaving more than 250 goods-laden vehicles stranded on the either side of the border.

Singh, after visiting the agitation site, told the media that the Assam government would approach the Centre to probe the October 22 bomb blasts in a school located at Khulicherra area near the Assam-Mizoram border.

“The blast at the school was possibly triggered by the miscreants to frighten the border residents. Senior police officials are closely watching the situation and the security along the inter-state borders was further tightened,” he said.

“The demarcated inter-state boundary should be respected by everyone. Necessary statutory provisions are being exploited and interactions with the Central government are being done on a regular basis,” he added.

The picketers were demanding withdrawal of Mizoram’s forces from Assam’s territory in Cachar and Karimganj districts.

“In the series of high-level meetings during the last two weeks, Mizoram officials had agreed to gradually withdraw their forces from the areas inside Assam territory. But, they are yet to withdraw,” a senior Cachar district police official said.

Mizoram ferries all its essentials, food grains, transport fuel and various other goods and machines through NH 306 which connects Vairengte in its Kolasib district to southern Assam.

Festering since October 9, the situation along the 164.6-km Assam-Mizoram border took an ugly turn with around 20 shops and houses being burnt and over 50 people injured in the attacks and counter-attacks by people on either side on October 17.

Union Home Ministry’s Joint Secretary (North East), Satyendra Kumar Garg had held a meeting with the Home Secretaries of Assam and Mizoram last week where it was agreed that both sides will maintain the status quo and hold regular talks to prevent any untoward incident.

After these meetings, over 300 stranded Mizoram-bound essential goods laden vehicles went to the neighbouring state.

Union Home Minister Amit Shah also spoke to Assam Chief Minister Sarbananda Sonowal and Mizoram CM Zoramthanga several times last week to defuse the crisis. Union Home Secretary Ajay Kumar Bhalla held a meeting, through video conference, with the Chief Secretaries of Assam and Mizoram.

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Rs 1,752 cr disbursed to 3 MCDs till Oct 26: Sisodia

Sisodia said the Delhi government paid MCDs their due share of taxes, but it has also paid a large sum over and above as loan.

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Manish Sisodia

New Delhi: Amid war of words over unpaid dues of healthcare workers in the hospitals run by the Municipal Corporation of Delhi (MCD), Delhi Deputy Chief Minister Manish Sisodia on Thursday wrote a scathing letter to three Mayors of MCDs alleging petty politics by them over the issue of delayed salaries to healthcare workers.

Sisodia claimed that it’s the MCD which owes money to the Delhi government.

The three Mayors had earlier protested in front of the CM’s residence claiming a large amount of balance payment from Delhi government to the MCDs.

Countering the claims made by the Mayors, Sisodia presented facts showing that not only had Delhi government paid all the funds due to the MCDs as per the Fifth Delhi Finance Commission, it has paid over and above the required amount resulting in a huge outstanding loans.

“As for the amount owed by the government of Delhi to the MCDs for the current financial (2020-21), as per the Fifth Delhi Finance Commission calculations, a total of Rs 1965.91 crore was due until October 26, 2020, of which Rs 1752.61 crore has already been paid,” Sisodia wrote in the letter.

“MCDs have outstanding loans from Delhi government to the tune of Rs 6008 crore, they also have arrears of Rs 2596 crore to the Delhi Jal Board. Hence, in all, they owe over Rs 8600 crore to the Delhi government,” said the letter.

Sisodia urged the three Mayors to rise above petty politics and focus on the real issue of corruption and financial mismanagement in each of the three MCDs. He urged the Mayors to demand the unpaid amount of Rs 12,000 crore from the Central government.

“I am writing this letter with much anguish and disappointment over your actions as the three Mayors of Delhi (NDMC, EDMC, SDMC) with regard to the unpaid salaries of doctors and healthcare workers in MCD hospitals.

“From your actions, it is clear that rather than finding a viable solution to the matter using all administrative options available to the MCDs, you are only interested in peddling lies and indulging in shameful politics over this issue.

“In the process, you have caused unprecedented pain to the families of thousands of healthcare workers and lowered the prestige of the national capital at a time when the entire country has united in the fight against Corona,” the letter said.

Sisodia said the Delhi government paid MCDs their due share of taxes, but it has also paid a large sum over and above as loan.

As on April 1, 2020, a total of Rs 6,008 crore loan is outstanding from the three MCDs, as per the records of the Urban Development Department. This includes Rs 1,977 crore outstanding loan from EDMC, Rs 3,243 crore from NDMC and Rs 788 crore from SDMC.

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India

PDP’s Srinagar Office Sealed After Protests Against Land Laws

Under the new land law, no domicile or permanent resident certificate is required to purchase non-agricultural land in Jammu and Kashmir.

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Mehbooba Mufti

Authorities in Jammu and Kashmir Thursday foiled a protest march by Peoples Democratic Party (PDP) against the new land law and detained several leaders from the party.

The party had organized a protest rally from the party headquarters in Srinagar to the Press Enclave. However, soon after the leaders reached the party headquarters, they were detained by the police force that was already deployed there. The police detained party members including Khurshid Aalam, Waheed Parra, Suhail Bukhari, Mohit Bhan.

The party had lodged a similar protest in Jammu on Wednesday.

The PDP president and former chief minister, Mehbooba Mufti in a tweet stated that the party office in Srinagar has been sealed by the administration and workers have been arrested for organizing a peaceful protest.

“PDP office in Srinagar sealed by J&K admin & workers arrested for organising a peaceful protest. A similar protest was allowed in Jammu so why was it thwarted here? Is this your definition of ‘normalcy’ that’s being showcased in the world?” Mehbooba tweeted.

“PDP’s @parawahid, Khurshid Alam, Rouf Bhat, @MohsinQayoom_& @buttkout were arrested by J&K police for protesting against the settler colonial land laws thrusted upon people of J&K. We will continue to raise our voice collectively & wont tolerate attempts to change demographics,” she tweeted.

Under the new land law, notified on October 27 by the Union Government, no domicile or permanent resident certificate is required to purchase non-agricultural land in the UT. Earlier, Article 35-A of J&K Constitution which was revoked on August 5, placed prohibitions on the sale of land to those who were not state subjects.

The central government has even empowered an Army Commander to declare any area in J&K as strategic for operational and training requirement of the armed forces.

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