Two prominent global reinsurers, SCOR and Axa Re of France, have initiated the process of setting up operations in the country, joining seven other multinational players for a pie in the reinsurance segment.
Seven global players — Swiss RE, Munich Re, Hannover Re, Lloyd’s, XL Catlin, RGA and Gen Re — have already received approvals from insurance regulator IRDAI. The nine companies are expected to pump in close to Rs 5000 crore to set up their operations, said an official.
While SCOR, the fifth largest global reinsurer has already started its operations, Axa Re which is for the first setting up branch operations outside its headquarters in Paris, is expecting its final approval from the IRDAI shortly. “Receiving the license from the IRDAI to establish a SCOR branch in India marks a milestone for the group in terms of solidifying its presence in the country, where it has enjoyed strong business relationships for many years. SCOR has been writing business with Indian clients since 1973, having opened a liaison office in India in 2005,” Victor Peignet, SCOR’s CEO Global P&C, said.
“We expect the P&C Indian insurance and reinsurance markets to continue growing at 15 per cent a year in medium-to-long term. Our strategy is to partner with a selected number of clients, with whom our long-term relationship is more important than short-term interests,” he said.
After several years of natural catastrophe losses (Cyclone Phailin in 2013, Hudhud in 2014, Chennai Floods in 2015), the Indian reinsurance market has been impacted by several large industrial losses in FY17. This has kept the market in deficit. While pricing is still a challenge in India, reinsurers anticipate a market correction driven by a reduction in investment income and the potential listing of insurance companies.
Axa Re which already has India exposure on an offshore business has an existing portfolio of $100-150 million focused on life and health. “With a direct branch in the country, we will expand our portfolio into other general insurance segments of the country,” said an Axa Re official.
With nine global players in India, foreign reinsurers don’t rule out the possibility of India becoming a reinsurance hub. “We know the government is trying develop India as global reinsurance hub and we would like to be a catalyst in this government effort,” said an official.
All nine companies are in the process of firming up teams of professionals to run Indian operations. Among the nine players, Axa already has a major presence in the Indian insurance industry in the form two joint venture with Bharti — Bharti Axa Life and Bharti Axa General Insurance. Munich Re, Swiss Re and Lloyd’s have set up their operations in India in the last couple of months.