General Insurance Corporation is gearing up to face competition as the Insurance Amendment Bill has thrown open the doors for foreign reinsurers to set up branches in the country. K Sanath Kumar, Acting Chairman and Managing Director of the country’s sole domestic reinsurer GIC Re, says that the company is increasing its capacity, particularly in niche products, and looking to expand its overseas business. Excerpts from an interview:

The Insurance Amendment Bill has opened the doors for foreign reinsurers to set up operations in India. How do you expect this to impact GIC Re?

We certainty don’t see any disadvantage in foreign reinsurers opening branches in India. We believe that when foreign reinsurers open branches here there will be realignment among reinsurers to bring better pricing in the domestic market as there will be a lot of restrictions to place business overseas. We also see more opportunity for surrounding business coming in — high-quality brokers and surveyors, actuaries and legal system. The whole ecosystem is poised to develop and we will be alive to any kind of new set-ups.  We also expect more seriousness and collaborations in the reinsurance industry to ensure that pricing will be at a healthier level. GIC Re is now getting ready, we are increasing our capacity and we are also reaching out to more products.

The insurance regulator has brought out a new exposure draft where it has given GIC Re first preference over foreign reinsurers which have a domestic branch…?

We expect foreign reinsurers to come and set up branches despite the revised guidelines. These regulations are only a reaffirmation of the earlier regulation, which was brought out after consultations with the industry. GIC Re has a 52 per cent share in the domestic reinsurance market. So, 48 per cent of the existing business is already going to other reinsurers. Most foreign reinsurers are already operating in the market through their representative offices in India or foreign brokers.

What are your plans on expanding overseas business?

Our internal target is that half of our business should come from overseas; we are now close to that; around 53 per cent of our business comes from domestic business while the rest comes from overseas.

The only worry is that GIC Re has a higher combined ratio (gross premiums collected minus claims and expenses paid), which we would like to bring down. We are expanding our presence in international markets, such as Kuala Lumpur, Dubai and London and our representative offices in Brazil and Russia. We are also entering the Chinese market. We are also trying to increase our prowess in niche areas, such as cyber liability and sports events and are focussing on expanding the life insurance business. 

GIC Re has also been trying to secure a syndicate in Lloyds?

We are a corporate member of the Lloyds but we are trying to get hold of a syndicate. Today, we have a partnership with Catlin which gives us hands-off access. We are looking at setting up a syndicate either organically or inorganically.

The general insurance industry in India has seen heavy discounts being offered in most segments. When do you see better pricing coming in?

We expect domestic pricing to pick up as soon as companies get listed.

Now IRDA has opened up the pathway for listing of general insurance companies as the market will assess them on their combined ratio, than their profit from investment income which has happened overseas. So, it is a matter of time.  

What losses do you estimate for the industry from the Chennai floods?

We are anticipating losses of around ₹2,500 crore for the insurance industry from the Chennai floods.

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