International reinsurers to be operating in India within six months
As India opens its market to international reinsurers, the Insurance Regulatory and Development Authority of India (IRDAI) expects foreign reinsurers to secure final clearance to open branches soon and several to be operational within six to nine months.
The regulator said seven applications from foreign players have been received so far. Foreign reinsurers must secure three levels of licences from the insurance regulator to start operations in India.
"We have received seven applications from foreign reinsurance companies, which have shown interest to open their branch offices in India. Applications from seven companies are in the different stages of consideration of the insurance regulator. We are hopeful they should be operational within the next six to nine months," said VR Iyer, a member of IRDAI, finance and investment committee.
Lloyd’s of London is set to establish a branch in Mumbai in 2017 having received approval in November, allowing it to provide onshore reinsurance service in India.
“India is one of the world’s greatest growing economies. I passionately believe that our presence will contribute to the development of a more diverse reinsurance market, which is fundamental to the stability and future growth of the Indian economy. This can help position India as a centre for insurance, reinsurance and associated services," Lloyd's chairman John Nelson had said in an earlier statement.
SCOR Global is also expected to start underwriting life and property/casualty (P&C) reinsurance business in India in April next year. It has been granted R2 authorisation by IRDAI.
Other foreign reinsurers, which may include Munich Re, Swiss Re, Hannover Re, RGA (Reinsurance Group of America) and Berkshire Hathaway’s reinsurance unit Gen Re, are hoping to operate in India next year after the liberalisation of the market.
India’s regulator amended the Insurance Act 1938 in 2015, allowing foreign reinsurers to open branch offices in the country.
By liberalising the reinsurance sector to global players, the Indian regulator aims to diversify offerings in order to mitigate risks in the country. "In India, catastrophic and disaster risks products are not available. With foreign reinsurance companies coming to the country, insurers can become creators," Iyer said.
