After seeing low insurance rates for several years, reinsurance company General Insurance Corporation of India (GIC Re) has refused to take business from general insurance companies where they have quoted really low rates, reported Business Standard.

Under Indian insurance rules, domestic insurers have to make the first offer of reinsurance to government-run GIC Re and if it is of the view that the companies have failed to price their risks responsibly, they will not get reinsurance cover, the report said

The rule now forces domestic insurers to make higher provisions for their risks which in turn is going to hurt their profits, the report said, adding that the country has the lowest insurance rates in the world, notably for fire.

The key business of these insurance companies is health, motor, fire insurance. Of these, fire accounts for 7 percent of the total gross direct premium of Rs 1.50 trillion in 2017-18, the daily said.

GIC Re has written to 34 insurance companies, saying that the pricing of fire risks in every category of industry needs to be raised, the report added.