Lloyd’s, World’s Largest Re-Insurance Marketplace, Opens India Branch
MS Amlin has signed up as an underwriter.
Lloyd’s of London became the first foreign re-insurer to enter the Indian market as it opened a branch in Mumbai.
Lloyd’s India will act as a domestic re-insurance branch of Lloyd’s of London, a company statement said. It will focus on infrastructure, agriculture and disaster management re-insurance, the statement said. Shankar Garigiparthy will lead the domestic operations as chief executive offer and country manager.
The company has signed up MS Amlin as an underwriter, while more insurers registered with Lloyd’s are expected to join. The number of such managing agents entering the onshore Indian market through Lloyd’s will be in “low single figure” in the first year or two of operations, said John Frederick Nelson, chairman of Lloyd’s of London in an interview to BloombergQuint.
India’s insurance sector is opening up. Last year, the government relaxed foreign direct investment norms for the insurance sector, allowing companies to hold up to 49 percent stake in domestic insurers. State-run General Insurance Corporation of India (GIC Re) was the only operational re-insurer in India until now.
Lloyd’s received the final approval from the Insurance Regulatory Development Authority of India (IRDAI) to open a domestic branch in November. The approval prompted more foreign players, including Swiss Re, SCOR SE, Hannover Re and Munich Re, to successfully seek a clearance from the IRDAI.
The regulator expects the other foreign insurers to roll out operations in the first six to nine months of the year, according to a report by wire agency PTI.
While the IRDAI guidelines allow foreign reinsurance companies to set up a branch and operations in India, government-owned GIC has the right of first refusal for any business they get. Nelson admitted that more Lloyd’s managing agents would probably have committed to entering the Indian market if it wasn’t for this stipulation.
(The right of first refusal to GIC)... is in some ways a disincentive. We don’t have a level-playing field, and in most of the rest of the world there is. We are talking to the regulator and the government about the merits of a level-playing field. And I think that in principle they are being very receptive to what we and our other international reinsurance competitors are sayingJohn Frederick Nelson, Chairman, Lloyd’s of London
How Lloyd’s Works
Lloyd’s, unlike insurance companies, is a marketplace which facilitates business between entities who want their risk covered and those who provide such covers. The sellers, called syndicates, are investors ready to underwrite risks for a premium. Its uniqueness is the ability to provide handcrafted policies for very specific cover requirements, that are hard to come by in the commercial market.