Global reinsurance giants can now get a foothold in India with the recently enacted insurance law paving the way for their setting up branches in the Indian market.
The passage of the insurance Bill by Parliament could herald the re-entry of Lloyd's — the world's specialist insurance market — into India through a branch establishment in this market, say insurance industry experts.
There are some comforting provisions in the insurance Bill for Lloyd's and that perhaps is the single most long-term impact of the new legislation, they said.
Anuraag Sunder, Managing Consultant-Insurance, PwC India, said allowing foreign reinsurers to enter the Indian market will benefit Indian consumers and corporates.
"There is lot of interest among foreign reinsurers to enter India. One can now see new market entry by them and better risk assessment methodologies," Sunder told BusinessLine .
However, one would have to wait for the insurance regulator IRDAI to frame rules as regards minimum capital, profit repatriation, etc, for the reinsurers, he said.
Currently, GIC Re is the sole reinsurer in India. Allowing foreign reinsurers to set up branches in India will bring in competition to GIC Re and benefit consumers.
Shashwat Sharma, Partner-Management Consulting, KPMG in India, said the insurance bill paves the way for foreign reinsurance companies to enter the Indian market by opening branches.
"The new Bill will help reinsurance business evolve as more experienced reinsurance companies come as foreign branches," Sharma said.
Monish Shah, Senior Director, Deloitte India, said allowing reinsurance companies to set up branches in India will help enhance the depth of reinsurance services in the domestic market.
LLOYD'S STRATEGY
Lloyds has recognised that relying on cross-border reinsurance business flowing into London will not by itself meet the aspirations of Vision 2025. Increasing Lloyd's share of insurance business in developing markets will also be required.
The role of brokers in London and in local markets is key to accessing new business as insurance markets develop in these economies, according to Inga Beale, CEO, Lloyd's.
Expansion into developing markets remains at the heart of Lloyd's vision 2025.
INSURANCE LAW
The Rajya Sabha had few days back passed the insurance Bill that among other things raised the limit on foreign stakes in Indian insurance companies from 26 per cent to 49 per cent.
This reform was stuck in Parliament for several years. However, even after the passage of the latest insurance law, management control in Indian insurance entities would continue to be with Indians.