The case for a reinsurance hub
It is now 13 years since the insurance segment was opened up in India, but the reinsurance business, through which insurers diversify their risks, has failed to make any headway in the absence of global players. While many global insurance giants have set up representative offices here, top reinsurers have ignored launching full-fledged operations. Lloyd’s of London has prefered branch operations in the country and is unwilling to enter into joint ventures (with a 26 per cent exposure).
There is merit in the recent proposal of insurance companies and brokers for a separate Reinsurance Bill, which will help in the formation of a reinsurance hub in Mumbai. Such a hub can help India unlock the full potential of insurance as a catalyst for economic growth, enabling entrepreneurs to take risks and thereby fuel innovation.
The entry of global reinsurers can further support the underwriting activities of Indian insurance companies and encourage more domestic investment in Indian insurers.
Currently, state-owned GIC Re, which is the sole reinsurer in the domestic reinsurance market, is also spreading its wings globally. Operating from a hub will give GIC Re more global recognition and acceptability. From a regulatory point of view,
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