Bruce Carnegie-Brown, Chairman of insurance and reinsurance marketplace Lloyd’s of London, has said that he believes the market in India is “on path to liberalisation,” according to reports from The Economic Times.
In an interview with the publication, Carnegie-Brown suggested that Lloyd’s was still uncomfortable with the order of preference rules in the country, as well as the right of first refusal currently offered to state-backed reinsurer GIC Re.
However, he added that overall the market is “moving in the right direction,” and acknowledged that it is “better to have an opportunity to play with that restriction than not to have the opportunity.”
“Sometimes, it may move too slowly and sometimes move in an imperfect way, but governments have many stakeholders and they have many pressures,” he remarked.
He further noted that, as an increasingly sophisticated economy, there is a growing demand for more complex re/insurance covers in India, particularly for business interruption and cyber risk in the services industry.
India is also about to become the second-largest nation in terms of domestic aviation, and a lot of the capacity needed to cover those risks is available at Lloyd’s
“As the economy grows, the risks grow, and therefore, risk protection,” the Lloyd’s Chairman told The Economic Times.
Last month, Carnegie-Brown said in a separate interview that he wants more syndicates to be able to access the Indian market, and criticised the Indian government for its delay in opening up the country’s re/insurance sector to overseas companies.
At present, Lloyd’s only has one syndicate operating in the Indian market, but Lloyd’s seems optimistic that many more syndicates at looking at entering the space.
Carnegie-Brown believes that the Indian market still requires more support from foreign capital and is hopeful that the government will soon update its policies accordingly.
Asked where Lloyd’s sees itself in India in 10 years’ time, Carnegie-Brown said that said that his vision was the same as for any other counterparty that Lloyd’s deals with.
“We very seldom compete with the domestic market counterparties,” he stated. “The biggest sector of insurance is motor insurance and we don’t do it anywhere in the world; so it tends to be that we get pulled in either to help create more capacity in a market that could not exist without us or to provide expertise on how to insure risks that are new in a marketplace.”
The Insurance Regulatory Authority of India (IRDAI) decided back in December 2018 to retain its first preference rules for GIC Re, despite growing pressure from the global re/insurance industry to relax the policy.
In August last year, the Indian government significantly lowered the required volume of Net Owned Funds (NOF) for foreign insurers and reinsurers looking to establish a branch in the Gandhinagar International Financial Services Center (IFSC).
It was hoped that the move would attract foreign insurance and reinsurance companies that operate in global financial centres to open a branch in the IFSC in India.
And in December, the Insurance Regulatory and Development Authority of India (Irdai) looked to further protect state assets against catastrophes with a proposal for a state-backed insurance scheme in certain states.