It had its first board meeting on Wednesday attended by the top officials of the four state owned non-life companies. The board meeting took note of the entire gamut of re-insurance regulation including both life and non-life as laid down by the Insurance Regaulatory and Development Authority (IRDA).

Apart from the original business of the 20 per cent obligatory premium of non-life companies, it can partcipate in the other normal reinsurance activities of the non-life companies.

According to the IRDA re-insurance guidelines, the companies have to give preference to GIC while placing the re-insurance out of their 80 per cent retention.

The basic purpopse of allowing the GIC to have the first preference is to develop a strong domestic re-insurance market. Also placing of maximum re-insurance deal within the country will prevent the outflow of forex.

The GIC can place back 50 per cent of the obligatory re-insurance business with a basket of non-life companies which will be placing their 20 per cent business with the national re-insurer. The GIC will charge 2.5 per cent overriding business.

Going by the IRDA's life re-insurance guidelines, GIC's role vis-a-vis life re-iinsurance business will be very limited. Unlike non-life companies the life companies donot have obligatory re-insurance scheme.

The IRDA guidelines stipulates the maximum retention of risk within the life insurance company itself and are free to place their reinsurance business of their own.

The new scenario will make GIC to compete with other re-insurance giants including Swiss Re, Munich Re and Zurich too get life re-insurance business.However efforts are still on to make it manadtory for the life insurance companies to place certain per centage of their risk business with the National Re.