GIC Re takes ‘wait and watch’ approach to 1/1 ahead of 1/4

General Insurance Corporation of India (GIC Re) is taking a “wait and watch” approach to this year’s 1/1 to see how renewals are progressing, Devesh Srivastava, chairman and managing director at the reinsurer, told Intelligent Insurer at SIRC 2022.

“1/1 is a large part of our book,” he said, “because 35% of GIC Re’s business is from countries outside of India.”

Backed by the Indian government, the reinsurer’s portfolio mix is roughly 65% domestic and 35% from outside of India.

“Largely, in that foreign book that we write, we are a follow market, essentially. So, we will see the terms and conditions and then run it through our own modelling and see [if] the price adequacy is there. Only then will we be committing capacity,” he said.

Srivastava said an important element for GIC Re is that the 1/1 renewals are the precursor to the 1/4 renewals, which is when the Indian domestic market renews.

“Largely the 1/4 renewals will be dictated by whatever happens on January 1. So, that is how we are looking at the market right now.”

It’s unsurprising that the 1 /4 renewals are crucial for GIC as the insurer “has a very dominant position” in India’s domestic market and writes about 70% to 75% of the market, Srivastava said.

“We haven't had a bad year in the sense that there have been no major cat losses in the domestic market. So we are pretty happy with the way it has progressed. On the international front, yes, there have been some losses coming to our books from the big events, like Hurricane Ian.”

Many senior re/insurance professionals at SIRC 22 in Singapore have been discussing the turbulent market conditions for the industry caused by roaring inflation, war in Ukraine, the lack of capacity and losses coming out of Hurricane Ian. But interestingly, Srivastava describes India, and therefore GIC Re, as “an ocean of tranquillity in a very turbulent sea”.

He said that this is because India’s inflation is under control, the government is taking major steps in infrastructure building and all that is translating into better premiums coming out of the market.

“The Indian direct non life insurance market is a high growth market, even today, growing around 15% year on year.”

This represents a big increase because it is a very large market, he added. As well as the advantage of a large market base, the Indian domestic market also has a new regulator and there is a push towards getting everybody insured. “There is a lot of movement happening in the Indian insurance industry and that's going to all go well for GIC Re,” he said.

Looking at the reinsurer’s international business, Srivastava the idea is “to get a good spread”, as the firm is already in 160 plus countries giving cover.

“This could continue, but price adequacy would be the driving force for our 1/1 renewals.”