International reinsurers apply for Indian licence despite restrictions

Munich Re, Swiss Re, Hannover Re, Scor and RGA are all reported to have also applied for reinsurance licences in India following the introduction of the new laws that are designed to streamline the registration process for foreign reinsurers that are prepared to invest in operations on the ground. The applications have been made despite the fact that T S Vijayan, chairman of the Insurance Regulatory and Development Authority of India (IRDAI), confirmed to reporters at a conference in Mumbai last week that Indian reinsurance companies will have the right of first refusal on reinsurance treaties. This means that General Insurance Corporation of India (GIC), the only Indian reinsurer, will be able to pick and choose the business it wants.hideThe foreign reinsurers that obtain licences will then be able to pitch for the business that the GIC does not want. That will give them preference over non-licensed foreign reinsurers that will find themselves at the back of the queue for the best business. "First preference is for Indian reinsurers and then to reinsurers for those who would have a branch presence in the country," said the IRDAI chairman, according to Indian newspaper Business Standard. Foreign reinsurers keen to expand into the Indian market have reportedly written to the Indian government and the country's insurance regulator, and met finance ministry officials, to discuss this issue and persuade them to fully liberalise the market. The regulator has decided not to back down and so foreign reinsurers will have to work within the new rules if they hope to grow in this potentially huge insurance and reinsurance market. Mr Vijayan confirmed that the IRDAI has already received six applications for reinsurance licences. XL Catlin confirmed that it has applied for a licence earlier this week. The other five applicants are thought to be Swiss Re, Munich Re, Hannover Re, Scor and RGA. In mid-November, the IRDAI published a draft of criteria for Lloyd's to establish a branch in India. This followed the publication of original criteria for other foreign reinsurers in October. Lloyd's chairman John Nelson gave a guarded welcome to the news. "We are pleased to see the commencement of the consultation phase on appropriate regulation that will allow Lloyd's to establish an onshore branch in India," said Mr Nelson. "We look forward to working closely with [the] IRDAI to ensure the requirements are appropriate to accommodate Lloyd's unique structure, on an equal footing with other reinsurers, and to managing a quick and smooth transition. Lloyd's fully expects to continue to provide its important reinsurance services to Indian cedents as it develops an onshore presence in India," added Mr Nelson. XL Catlin appeared somewhat more enthusiastic about its Indian licence application despite the restrictions. It confirmed late last week that it has begun the licensing process to establish a reinsurance branch in India. Brendan Plessis, head of emerging markets, told Commercial Risk Europe in an interview this week that the decision to pursue market entry into India is aligned with XL Catlin's strategy of forging a presence in emerging and developing markets. "We want to be where economic activity is increasing and the re/insurance market would benefit from our global expertise, knowledge and products," said Mr Plessis. XL Catlin's head of emerging markets added that India has seen significant economic development over recent years. Mr Plessis added that big planned investment in infrastructure will not only help accelerate the growth of wealth and middle classes in the country, but delivers a lot of new risk that needs to be managed and transferred. Pending all necessary regulatory approvals, Mr Plessis said that his company expects to be able to commence operations in India later this year. Greg Hendrick, XL Catlin's chief executive of reinsurance, said: "I believe we have what it takes to respond to the reinsurance needs of companies and brokers in this vast, growing economy. The local market needs a reinsurer with global scale and technical capabilities, with underwriters based locally who understand the risks and can offer breadth of product." Mike McGavick, XL Catlin's chief executive officer, added that in his view the re/insurance market in India is 'primed' for development. "This is the right time for us, and getting the right people on the ground, offering the right solutions will define our success," said Mr McGavick. "Traditionally, the reinsurance market has been under-represented in the region, but we are now in a position to be in the first tier of global foreign reinsurers opening owned branches in India. Meeting the regulatory requirements is a key priority for us, as we move forward to demonstrate our commitment to this growing market," he added. Mr Plessis explained that XL Catlin already has over 1,000 employees working in India, roughly one seventh of its total workforce. This is because the insurance group has had service operations in India since it opened its first support services offices there in Gurgaon in 2004. XL Catlin has a representative office in Mumbai and staff spread across offices in Gurgaon and Bengaluru.

International reinsurers apply for Indian licence despite restrictions

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