Co is in discussions with the govt to set up a reinsurance branch here, says chairman John Nelson
Lloyd’s of London plans to set up a branch in India after the Insurance Amendment Bill becomes a law, a top executive said.
Lloyd’s is a market where members join together as syndicates to insure risk. It has 93 different underwriting businesses.
As per the Insurance (Laws) Amendment Bill 2008, foreign reinsurers will be allowed to set up branch operations. The Bill, which has been passed by the Lok Sabha, was referred to a Parliamentary Standing Committee after the government could not get it cleared in the Rajya Sabha. It is likely to be taken up in the winter session, which starts on November 24.
“Lloyd’s intends to establish a reinsurance branch in India once the Bill is passed,“ said John Nelson, chairman, Lloyd’s insurance. “Lloyd’s is in discussions with the Indian government for the possibility of the onshore presence. If that happens, it will open up a hub in India“.
According to Nelson, the details of what a branch of any foreign reinsurer, including Lloyd’s, will look like will be clarified in the regulations written once the Bill is finalised.
Nelson said the most effective and efficient model for Lloyd’s to operate through is to create an environment locally that enables this market model to work.
Lloyd’s recently started operations in China by incorporating as a company. However, Nelson said that this option is not being considered for India as Lloyd’s believes that it would introduce an unnecessary layer of complexity between Indian clients and the specialist reinsurance support they seek from Lloyd’s.
“Message and information coming out of the government is positive. A Lloyd’s reinsurance branch in India will put us closer to the risks we cover, enabling us to support the local industry in pricing, product development, risk mitigation, risk management and claims handling,“ said Nelson. “We are looking to cater to insurance needs of B2B and catastrophe in India. We are writing significant offshore business.“
Lloyd’s has provided important specialist reinsurance support to India from London for decades. Many large mega risk policies, including refineries and aviation, are underwritten in the London market. “Lloyd’s also provides limited insurance coverage to India through a number of exemptions to the restrictions on foreign insurance providers in India, such as insuring risks located within special economic zones,“ said Nelson.
Non-life insurance penetration rates in India are at 0.8% of the gross domestic product. Lloyd’s own research shows that a 1% rise in insurance penetration translates into a 13% reduction in uninsured losses -a 22% reduction in the taxpayers’ contribution following a disaster -and increased investment equivalent to 2% of national GDP.
Source: Economic Times