Obligatory cession refers to the compulsory sharing of insurance risk by insurers with the national reinsurer
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ipopba
The Insurance Regulatory and Development Authority of India (IRDAI) notified the obligatory cession for the financial year 2026-27.
As per the Gazette notification, the percentage cession of the sum insured on each general Insurance policy to be reinsured with the Indian re-insurer(s) was four per cent respect of insurance attaching during the financial year beginning from April 1, 2026 to March 31, 2027, except the terrorism premium and premium ceded to nuclear pool wherein it would be made ‘NIL’.
The entire obligatory cession is to be placed with General Insurance Corporation of India with a notice of information on cession. There would be no limit on sum insured applicable for the cessions made during the current financial year.
On the commission, the notification also decided the said percentage of commission on obligatory cession for different classes of business. It will be a minimum 5 per cent for motor third party and oil & energy insurance and minimum 10 per cent for group health insurance. For crop insurance it was pegged at minimum 7.50 per cent.
Obligatory cession refers to the compulsory sharing of insurance risk by insurers with the national reinsurer. The main purpose of this is strengthen the domestic reinsurance capacity, providing stability to the insurance market, among others.
Published on April 17, 2026
