Lloyd’s of London syndicates are looking to expand their presence in India and are keen to increase their participation in regional reinsurance business, after Lloyd’s confirmed that it will establish a reinsurance branch in the country prior to the April renewal season, according to Vineet Aneja of Clasis Law.
“The establishment of Lloyd’s India will presage a period of intense activity among syndicates keen to increase their exposure to India. We are experiencing a flow of enquiries as syndicates wishing to participate in Indian reinsurance business move to set up service companies in India,” said Aneja, a Partner at Clyde & Co’s Indian associated law firm, Clasis Law.
Lloyd’s announced earlier this year that it received final regulatory approval from the Insurance Regulatory Development Authority of India (IRDAI) to establish a branch in the country, stating that it hopes to launch in India in time for the April 2017 renewal season.
And now, following the imminent arrival of Lloyd’s in India, Aneja has said that syndicates are working fast in an effort to increase their presence in the region and capitalise on the numerous regulatory and legal changes that have facilitated the entry of foreign insurers and reinsurers, and the specialist Lloyd’s marketplace.
2015 saw the introduction of a range of new laws focused on improving the Indian insurance and reinsurance industry, ultimately making it more attractive to foreign entities in order to boost the market. In the following year the new rules and laws started to be implemented, and “now that the new legislation is bedding in, international players are finally able to start building or strengthening their presence in one of the world’s most promising insurance markets,” said Aneja.
India has a growing middle class and a population of more than 1.25 billion, combined with fairly low insurance penetration levels, so the opportunity for insurers and reinsurers to provide capacity and solutions and expand their offering in the country is vast.
A number of global insurers and reinsurers have now received final regulatory approval to operate in the country, with more licence applications expected in the coming months.
Joint ventures also remain a viable way for players to access local market knowledge and expertise, and since the change in law that meant foreign entities could increase their stake in local joint ventures to 49% from the previous 26%, without prior approval, Aneja says a number of global insurers have already taken this step in order to increase their participation in the Indian market.
“We believe that setting up a branch or subsidiary will also continue to be an attractive route to growth, especially where barriers to M&A exist. The new rules in India have seen the large global insurers move quickly to set up new offices and position themselves in a market which offers genuinely huge potential,” said Aneja.