The mega plan of state-owned reinsurer General Insurance Corporation of India (GIC Re) to become a member of Lloyd’s market, the Mecca of insurance companies, is not going to work out unless the country opens up the insurance sector further.
Putting conditions for the Indian reinsurer’s entry into the Lloyd’s market, a top official and board member of Lloyd’s UK said the Indian company can think of joining Lloyd’s only after India allows more foreign investment in the insurance sector.
When contacted, an official spokesperson of Lloyd’s said, “We will not be able to offer additional support from within India unless there are changes to the law to allow foreign reinsurers to establish reinsurance branches on the ground. That is a public policy decision for the Indian government and Parliament to make.”
On a specific question whether there is any condition from the Lloyd’s side which can be a barrier in GIC Re’s efforts to take over a Lloyd’s syndicate, the spokesperson said, “Lloyd’s does not talk about individual applications or expressions of interest to join the Lloyd’s market.’’
“Entry into the Lloyd’s market is subject to Lloyd’s approval and we have rigorous criteria against which all applications are considered. Each application will be considered on its individual merits,” the spokersperson said.
Lloyd’s is keen to play its part in India’s success story and we already provide important reinsurance support to the local market, he said.
Earlier AK Roy, CMD, GIC Re had announced that the national reinsurer is planning to acquire a syndicate - through which Lloyd’s market does business — to strengthen its financial standing in the global reinsurance market.
“We haven’t decided as yet. We shall continue looking at the opportunities to do so,” said Roy.
The insurance bill, pending in the Rajya Sabha since 2008, provides for increasing the foreign investment limit in the sector to 49 per cent from 26 per cent. The Standing Committee on Finance, headed by senior BJP leader Yashwant Sinha, did not favour raising the FDI ceiling. finance minister P Chidambaram recently said the bill will be taken up in the winter session of Parliament.
Unlike many other insurance brands, Lloyd’s is not a company; it’s a market where members join together as syndicates to insure risk. Much of Lloyd’s business works by subscription, where more than one syndicate takes a share of the same risk.