Who is to Blame? Brokers, Reinsurers, or Cedants? A Critical Review of India’s Reinsurance Dynamics

The Indian reinsurance landscape is witnessing a strategic recalibration marked by rising reinsurance costs, hardening markets, and regulatory constraints. A growing debate surrounds the diminishing role of reinsurance brokers, especially in domestic placements, and the shifting power dynamics among cedants, reinsurers, and intermediaries. As traditional relationships realign under pressure, the question arises: Who is to blame for the current state of affairs—the cedants, the reinsurers, or the brokers themselves?

1. Reinsurance in India: A Brief Context

Historically, reinsurance placements in India followed a structured route, with the General Insurance Corporation of India (GIC Re) acting as the national reinsurer. GIC Re enjoyed the first right of refusal on most business and commanded a significant share of the reinsurance pie.

Brokers, both domestic and international, played a prominent role as placement advisors, identifying reinsurers (especially foreign capacity providers), managing negotiations, and facilitating documentation and recoveries. Over time, however, the role of brokers has been increasingly confined, particularly in domestic placements, as reinsurers and cedants opt for direct placements, bypassing intermediaries.

2. Broker Disintermediation: Reinsurers Leading the Charge

In the hardening reinsurance market of the last few years—driven by global loss events, tightening capital, and risk aversion—reinsurers have sought to exercise greater control over treaty structures, pricing, and terms. In this context, many reinsurers have begun to express a clear preference for direct placements, citing the following reasons:

• Cost Efficiency: Avoidance of brokerage fees, especially in large, loss-affected portfolios, helps reinsurers improve technical margins.
• Direct Engagement: Reinsurers prefer to interact with cedants’ technical teams directly, enabling better risk understanding, bespoke structuring, and quicker responses.
• Control over Terms: Negotiations conducted directly are often seen as more transparent and less commercially diluted by intermediary interests.

As a result, in most domestic reinsurance treaties in India, the broker is either completely removed or relegated to a passive, back-office role.

 3. Brokers: Placement Facilitators or Value Creators?

The hard truth is that many reinsurance brokers operating in the Indian market have failed to evolve beyond transactional placement roles. In an era where reinsurers demand in-depth portfolio analytics, actuarial rigor, and innovative structuring, brokers offering only superficial market access bring limited incremental value.

What value are brokers expected to add?

• Designing optimal treaty structures and retention strategies
• Providing technical pricing support and alternative capacity options
• Facilitating complex claims recoveries and post-placement analytics
• Advising on reinsurance programme diversification and capital relief

Yet, many Indian cedants report that brokers have largely confined themselves to "market search and placement", particularly for cross-border reinsurers (CBRs), often failing to demonstrate technical capability or negotiate better terms proactively.

4. Cedants: Between Loyalty and Compulsion

Indian insurers (cedants), especially state-owned and older private players, have long-standing relationships with brokers. These brokers, in turn, built a network of cross-border reinsurers to secure facultative and treaty support. However, the recent IRDAI regulations have tightened the norms for CBRs, requiring higher financial strength, minimum ratings, and registration procedures, thereby reducing the pool of eligible reinsurers.

Under pressure from:

• Domestic reinsurers, including GIC Re, to go direct.
• Shrinking capacity from CBRs due to regulatory tightening.
• A hard market, making reinsurance expensive and conditional.

Cedants find themselves with limited negotiation leverage. Consequently, they are forced to sideline brokers—not necessarily by choice, but due to market pressure and regulatory realities. Some insurers have even had to terminate long-term broker relationships, weakening a system that once offered risk advisory continuity.

5. A Market Reality: Power Has Shifted

This current dynamic reveals a systemic shift:

Reinsurers dictate pricing and participation terms due to global capacity constraints.

• Cedants must accept terms to secure coverage, regardless of long-term strategy.
• Brokers are caught in the middle, often unable to protect their relevance without demonstrating deeper value.

This is especially true when brokers fail to invest in:

• Portfolio analytics and actuarial capability
• Treaty modeling software and comparative benchmarking
• Post-placement services like bordereaux management and claims recovery

6. Who Is to Blame? A Shared Responsibility

Rather than laying blame at a single doorstep, the current imbalance is the result of cumulative missteps:

7. What Lies Ahead?

The Indian reinsurance ecosystem must redefine stakeholder roles:

• Brokers must pivot from placement agents to risk advisors and structurers. Their survival depends on the ability to bring differentiated technical and analytical value.
• Reinsurers should acknowledge that brokers can help bridge gaps, especially in smaller and rural-focused insurers where capacity access, product innovation, and treaty diversification are needed.
• Cedants must reassess their reinsurance strategy and invest in in-house treaty design, modeling, and negotiation capability, while continuing to leverage brokers who add real value.

A Call for Strategic Realignment

India’s reinsurance sector stands at a crossroads. Disintermediation of brokers may continue in the short term, but unless all parties commit to a value-driven partnership model, the long-term health of the ecosystem will suffer. Brokers need not be redundant—but their future relevance lies in transformation. Reinsurers must balance cost considerations with ecosystem development. Cedants must evolve from passive consumers to strategic buyers.

The blame, if any, lies not in individual actions but in the systemic inertia that prevented the ecosystem from moving to a value-based, technically competent reinsurance model. It's time to course-correct.