As the Indian economy gains in sophistication, the trading patterns between it and other countries develop and it would need more complex covers, such as business interruption cover and cyber risk cover, Mr Bruce Carnegie-Brown, chairman of Lloyd’s of London, has said.
He made these comments in an interview with The Economic Times,when he was asked how Lloyd’s would go about doing business in India where a state-backed reinsurance entity has the first right of refusal.
Mr Carnegie-Brown said, “I think this market is also on the path to liberalisation. It has not got there yet, but the preference shown to GIC represents a point of friction in the journey… but it’s better to have an opportunity to play with that restriction than not to have the opportunity. It is the same issue on distribution side, with the opportunity to move up from 49% to 100% ownership of the business, and respectively, for underwriters to be able to take 74% ownership of the business. If we step back and look at the journey, it’s moving in the right direction.
“Sometimes, it may move too slowly and sometimes move in an imperfect way, but governments have many stakeholders and they have many pressures. Would we like it to be fully liberalised? Sure.”
When asked which part of the business Lloyd’s can move to India, Mr Carnegie-Brown said, “Pretty much all of it could move to India in due course. The question is, why it would move to India if it’s more efficient to do it in London? I’m agnostic about the distribution. What I want is for it to come to Lloyd’s. Do I care if it comes through Lloyd’s India or Lloyd’s Singapore or Lloyd’s London? Not really.
“But I think there is a bigger opportunity for getting closer to our customers here in India by having capital here, and as you understand a market better, you get more engaged; your opportunities also begin to grow.”
He said that Lloyd’s has over the last two years been transforming underwriting performance. He added, “For any insurance, underwriting makes for two-thirds of cost structure. So, being more disciplined in underwriting is what we’ve done.”
In addition, he said, Lloyd’s needs to focus on the administration cost of underwriting and distribution. It is investing in technology to try and improve the quality of data it takes into the marketplace and the services it can provide.