 "We are waiting for Parliament to approve insurance ordinance: Vincent Vandendael")
After the promulgation of the Insurance Laws (Amendment) Ordinance, have you firmed up your plans to set up a branch in India?
We welcome the ordinance. But at Lloyd’s, we are waiting to see it turn into an Act. We want to operate in a market that provides continuity and security. Insurance and reinsurance are essential to every country to protect their existing resources.
We are optimistic the Indian government will continue on this journey and are waiting for Parliament to approve the ordinance. Apart from that, the regulatory framework around it is equally important.
What are the new areas of opportunity that you see in India?
There is a big upside potential in insurance penetration in the country. The penetration figures which are low are only expected to go up from now onwards. The government has marked specific sectors, which would need additional investment. The $1 trillion-plus investments needed in the area of energy that includes oil & gas, power, electricity distribution and infrastructure, apart from ports and railways will mean creation of more assets.
More assets would mean more opportunity for insurance premium creation as well. We are experts in the areas of construction, ports, tunnelling and energy and have a vast amount of expertise to offer since we have seen these risks on a global basis. As India grows further, the risks will only become more complex. With liabilities also growing, the country needs to protect its assets and resources.
Your Vision 2025 has identified five markets that would be the areas focus for Lloyd’s. How will this strategy pan out?
At present, 81 per cent of our business comes from developed countries. We want this to become 50-50 between developed and developing countries by 2030. We have identified five territories as part of Vision 2025. These are China, Brazil, India, Turkey and Mexico. In China, we have licence for insurance and reinsurance activities in Shanghai and in a few months, we will begin operations in Beijing. Similarly, we have 11 managing agents in Brazil.
In Turkey, too, we are in discussions with the authorities to enter the market, while in Mexico we have opened up our office. Apart from these, Dubai is an important market where we’re looking to expand. The same is with Columbia - we are studying the market closely and would look to file an application to enter the market.
Which segments will you concentrate on in India?
Power generation and construction are the drivers of international growth and these would the focus segments. We’re also looking closely at the agri-market, apart from other segments such as directors and officers’ liability, errors and omissions where we can provide expertise.
Apart from these, we’ll also be able to offer knowledge on claims’ management and claims handling along with risk modelling. We’ve analysed a risky cities research showed that Mumbai will face $48 billion economic losses over the next 10 years.
Further, you need trained talent in the insurance and reinsurance space. Young talent should be interested to be in this sector for long term and appropriate training programmes are required for that. In London, for example, there are 50,000 professionals who are active in the insurance and reinsurance sector.
The quality of the regulatory framework should be good, as also the relationship with neighbouring countries. Singapore has a good model where there is proper framework around the whole sector.
In Europe, too, there is freedom of services where one entity is licensed to operate in many countries. India could also look to tie up with other countries in a similar manner.
Indian players such as General Insurance Corporation of India (GIC Re) are entering Lloyd’s. Is it crucial for Llyod’s to have representation from emerging countries?
GIC Re, a reinsurer player, has secured a presence in the Lloyd's market by setting up a special purpose syndicate sponsored by Catlin. We wish to broaden the capital base of Lloyd’s and through newer entries, we get capital from emerging markets. This is with the expectation that the entities bring business that we currently don’t have.
However, they should also bring a pool of people so that we can have diverse talent at Lloyd’s and are able to train people in a sophisticated market.
Lloyd’s also provides a wide array of training programmes for different stakeholders in the insurance sector. How has it progressed?
Under our Global Development Centre, we have a programme for brokers from foreign markets. We started it in the US, and then expanded to other markets as well. Here, these brokers come to Lloyd’s for a week to be trained on specific lines of business.
We have a similar programme in London and Singapore for regulators. This helps regulators understand how the London market works and also helps them exchange the best practices from other countries. The Insurance Regulatory and Development Authority of India is also heavily involved in this programme - it has been regularly sending representatives. For risks managers, too, we have some programmes wherein senior and sophisticated risk managers share the best practices.
We’re also looking at a virtual version of these programmes. Pilot versions of these are being run in Europe, which will later be expanded globally.