Lloyd’s, which on Monday got first level approval to provide onshore reinsurance services in India, said it would push the government to relax a rule that puts Indian re-insurance companies at a favourable position against foreign insurers.
John Frederick Nelson, the chairman of Lloyd’s, toldBusiness Standard, We are excited to have got the licence from the insurance regulator last week, but we think the expansion of the Indian market could be slowed by the unequal treatment.
He also said Lloyd’s could consider joining India’s sole re-insurer, as of now GIC Re, in the Indian nuclear liability pool. We have to take those decisions as we go along. But yes, in principle, we are open.
Nelson is in Delhi as part of a delegation of CEOs of UK-based companies that have accompanied UK Prime Minister Theresa May.
The permission that Lloyd’s got on Monday will allow it to set up a branch in India in 2017. It got an R1 licence, which is the first stage of approval for any insurance entity in India. After R1, the regulator gives R2 and R3 licences to make a branch operational.
The Insurance Regulatory Development Authority of India had already approved the first stage licence, or R1, to four foreign re-insurers and one Indian entity, ITI Re-insurance, but under two categories.
The first category is for Indian re-insurers who will get a minimum of 5 per cent of each new domestic reinsurance business. The rest can be farmed out among the foreign players. Nelson wants this asymmetry to be erased.
Lloyd’s is the world’s oldest insurance venture. The society of underwriters has been in operation since 1688 and even today ranks sixth among all the re-insurance companies of the world by premium received.
The emergence of the foreign reinsurers will be a challenge for GIC Re which has so far enjoyed a monopoly position in the domestic reinsurance market.
For instance, the nuclear liability pool to ring-fence the risks of nuclear power plant operators in India is exclusively run by GIC Re with participation from mostly state-run general insurance companies.
Nelson said the launch of their reinsurance business will be a slow start in India from next year, their third Asian base after Singapore and China. Some of the Indian business getting written in Singapore should fly back here once the market stabilises, he said.
Opening up of the Indian re-insurance market has been seen as a major piece of reform of the Indian financial sector.
The NDA government has liberalised the sector as a part of allowing 49 per cent foreign investment into it, last year.
One of the changes allowed is to permit foreign re-insurance companies to set up shop in India, including Lloyd’s which is strictly not a company but a society of underwriters, who offer cover for almost all sorts of risk, personal or business.
Curated from Lloyd’s to push for level playing field