5 February 2013 News

Indian ‘reinsurance hub’ won’t happen overnight

While proposed reforms to the regulations governing reinsurers in India could make it easier for foreign players to launch operations in India, their implementation will not necessarily facilitate the speedy creation of a reinsurance hub in the country – as some commentators have claimed.

That is the opinion of Philip Chung, associate director at rating agency Standard & Poor's (S&P), who says that while the Insurance Amendment Bill could have a significant positive impact on the reinsurance industry in India, it will still take some time for the necessary infrastructure and regulatory environment to be put in place.

“You cannot build a reinsurance hub overnight,” said Chung. “You need to have the basics in place, and looking at other regions, it might take some time for a hub to be formed in India.”

The bill would, however, create significant opportunities for foreign reinsurers looking to capitalise on the economic growth taking place in India. As economic activity in India increases so too does the amount of insurable risks. The Bill, if enacted, could make it easier for foreign reinsurers to source insurance business to a greater extent than they do now.

In particular, the Bill would also allow foreign reinsurers to establish a greater physical presence in India. India is a huge market, with significant potential for future growth, and so a presence on the ground will allow foreign reinsurers better access to data.

“This will allow them to better assess risks,” says Chung.

He also believes that increases in FDI limits will enhance the financial flexibility of life and non-life insurers through greater access to global investors.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk