With more casualties coming up in the global sub-prime meltdown, Indian general insurers, both in the public and private sector, are increasingly becoming jittery. Unlike the banking sector, the insurance sector is far more vulnerable to global capital market meltdowns. Although none of the general insurers invest in foreign capital markets, the vulnerability stems from their reinsurance exposures. Up to 30 per cent of the public sector insurers'' and 55 per cent of private players'' liabilities are reinsured with global insurers, either through treaties or through the Facultative reinsurance.
The United India General Insurance Company said, they are observing the situation now. This optimism, however, stems from the fact on account of the substantial domestic reinsurance capacity is available from the national reinsurer, General Insurance Corporation (GIC). GIC has a net worth equivalent to Rs 6,500 crore ($ 1.7 billion). But this year onwards, GIC has already pared its statutory reinsurance to just 15 per cent from 20 per cent last year.
The United India General Insurance Company said, they are observing the situation now. This optimism, however, stems from the fact on account of the substantial domestic reinsurance capacity is available from the national reinsurer, General Insurance Corporation (GIC). GIC has a net worth equivalent to Rs 6,500 crore ($ 1.7 billion). But this year onwards, GIC has already pared its statutory reinsurance to just 15 per cent from 20 per cent last year.
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