The Insurance Regulatory and Development Authority of India (IRDA) has expedited the release of draft exposure norms for facilitating the entry of Lloyd’s, the world’s largest specialised reinsurer, in India.
Though IRDA had said that it will release such norms in December, the regulator released the draft norms last week. Earlier IRDA had finalised the entry norms for the foreign reinsurers through branch operations.
Lloyd’s operates through its multiple syndicates and needs a separate licence for setting up operations in the country. “We have been trying to enter the Indian markets since long and wanted government and regulator to put the suitable legal frame work. I am happy it has happened now. The involvement of Lloyd’s directly in the Indian market can help the development of local operational expertise, not just in underwriting, but also in a wide variety of professional and ancillary services. We have seen this in our hubs around the world,’’ said James Nelson, chairman, Lloyd’s.
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Currently, Lloyd’s provides significant reinsurance support from London on an offshore basis. But a local presence in India for Lloyd’s would enable us to enhance this existing support to what needs to become a rapidly growing insurance market, he said. Among other factors, the eligibility norms for Lloyd’s set by the insurance regulator include net owned funds of Rs 5,000 crore and infusion of a minimum assigned capital of Rs 100 crore into Lloyd’s India.
It has also set a condition that Lloyd’s UK should provide a letter of comfort so that its India operations can access the Central Funds of Lloyd’s UK with respect to Lloyd’s India. Lloyd’s India can accept reinsurers business ceded by Indian insurers as well as inward reinsurance business from cedants outside India.
Lloyd’s India being a market should ensure that the market and the constituents are housed in one location for the conduct of reinsurance business, said the draft. The appointment, removal and managerial remuneration of CEO, Lloyd’s India will be with the prior approval of the IRDA.
The details of key personnel of a service company should include chief executive officer, chief underwriting officer and chief financial officer whose details shall be furnished at the time of registration.
The service company of Lloyd’s India should retain the core activities such as underwriting, claims settlement and regulatory compliances; and may outsource functions such as back-office servicing, investment, IT, accounts, marketing, human resources, administration and publicity. No other function can be outsourced without the prior approval of the IRDA, it said.