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The Indian reinsurance market, which was thrown open to the foreign companies last year, is set to witness intense competition with over a dozen players, including a Warren Buffet company, readying to enter the field currently dominated by a sole player — General Insurance Corporation of India (GIC Re).
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After giving final licences to five global players, the Insurance Regulatory and Development Authority of India (Irdai) has cleared preliminary approvals to four more players, including Lloyd’s of London, Gen Re of Warren Buffett and Axa Re last week. While Lloyd’s has received R2, the second round of regulatory approvals, Axa Re and Gen Re have received R1. XL Catlin has also received the preliminary licence.
Insurance sources said four more global players are in the process of approaching Irdai for licence, taking the total number of aspirants to 13. The first-ever Indian private sector reinsurer, ITI Reinsurance, promoted by Sun Pharma honcho Sudhir Valia, is expected to receive its final licence soon. Currently, state-owned GIC Re is the only reinsurer in the $3-billion Indian reinsurance market.
Axa, which already has two insurance joint ventures with Bharti — Bharti Axa Life and Bharti Axa General Insurance, has made a surprising entry into the country’s reinsurance market. What has made India reinsurance venture special is that Indian branch will be the second one globally next to Paris where it is headquartered. “We are really impressed with the ongoing economic developments in the country and have decided to take a plunge in the reinsurance market also,’’ said a company source in Paris.
Munich Re, Swiss Re, Hannover Re, SCOR and RGA are set to open their branch operations in India as they have received final licences (R3) from the Irdai. The insurance regulator follows a three-step approval process, known as R1, R2 and R3, for giving licences to any reinsurer. All these reinsurers received R3 approval after bringing in the required capital of Rs 100 crore to start their operations in India.
Global reinsurers, including the ones that have received final regulatory approvals, are already doing business from India through their offshore offices and have an exposure of over $1.5 billion in Indian markets. Global reinsurers have waited long to set up direct operations in India after the Insurance Amendment Act, 2015 had allowed them to open branch operations rather than subsidiaries in the form joint ventures with a local partner in India.
The new reinsurers are likely to inaugurate their India offices in January after forming local companies. They are targeting April 1 renewals when almost Rs 1 lakh crore of general insurance business will be renewed by the Indian general insurance sector.
Munich Re India stated: “We see India as one of high primary growth market with future growth potential across all segments of insurance. We see potential of traditional as well as tailor made and innovative solutions to support clients in risk management and capital management areas to help them grow.’’
An RGA official said with the branch licence, RGA will be able to give better, faster and efficient services to its clients. The Indian Insurance market has tremendous potential to grow and RGA will be able to support this growth through innovative products in life and health insurance solutions, RGA said.
