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The Insurance Regulatory and Development Authority of India (IRDAI) has permitted the UK-based reinsurer Lloyd’s to set up its branch office in India.
The permission has been given in view of the promulgation of Insurance Laws (Amendment) Act, 2015, the regulator said in a circular issued here on Friday.
Lloyd’s is one of the major insurers in the UK and has been in business since 1688. It’s underwriters are permitted to write reinsurance in or from the UK. The UK market is currently ranked as the second largest source of revenue for Lloyd’s globally and the largest in Europe.
The modalities of approval have been announced as an exposure draft by the IRDAI to serve as a basis for other applicants in future.
The subsidiary of UK reinsurer, Lloyd’s India, will be granted certificate of registration to set up market and associated structures for conduct of reinsurance business in India and outside India, the circular said. The constituents of Lloyd’s India will also be granted recognition.
According to the draft, the applicant should have in-principle clearance from the home country regulator, applicant being registered or certified in a national regulatory environment with whom the Government of India has signed a Double Taxation Avoidance Agreement.
It should have minimum net owned funds of ₹5,000 crore besides minimum credit rating of at least good financial security characteristics from any of the renowned credit rating agencies for the last three years, being in reinsurance business for at least 10 years. The capital to be infused in India has been prescribed at minimum ₹100 crore.
“One of the important conditions governing approval of Lloyd’s India is the commitment given in the letter of comfort by Lloyd’s UK and access to the Central Funds of Lloyd’s UK with respect to Lloyd’s India,’’ IRDAI said.
The draft regulations also provide Indian companies to set-up service companies that meet the Lloyd’s specified criteria.
Lloyds India should retain 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.
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