Lloyd's India syndicates to retain some minimum Indian reinsurance biz: Irdai

Syndicates granted approval not to be given preference in reinsurance contracts for 3 years, unless they have got approval for exemption from retention limit

Each syndicate operating under Lloyd’s, the specialist insurance market, has to retain a minimum of 30 per cent or 50 per cent of the Indian reinsurance business based on the type of the certificate or registration. In its regulations on Lloyd's India, the Insurance Regulatory and Development Authority of India (Irdai) said a syndicate granted approval would not be eligible for order of preference for cessions by Indian insurers unless they have received approval for exemption from the retention limit. Such cessations are available to Indian reinsurers for a minimum period of three years.   

The regulator said every Indian insurer, in order of preference, should offer for participation in its facultative and treaty surpluses to Lloyd’s India on par with branch offices of foreign reinsurers. Lloyd’s India was also required to report to the regulator more than five per cent erosion in the net-owned fund of the applicant (syndicates).

Irdai said the service company of Lloyd’s India should retain the core activities such as underwriting, claims settlement and regulatory compliances. It will be allowed to outsource functions such as back-office servicing, investment, IT, accounts, marketing, human resources, administration and publicity.

The regulator said where it was of the opinion that the operations of Lloyd’s India, its service company or syndicate(s) were not in the interests of the Indian market, it reserved the right to take appropriate steps including suspension or cancellation of certificate of registration after giving an opportunity to Lloyd’s of be heard. Any syndicate or service company opened with the regulator’s approval would be closed only with its prior approval, Irdai clarified.

Lloyd’s, which has a representative office in India and has been granted certificate of registration to function as a branch office, would be required to close the representative office within six months of grant of the certificate of registration.

Syndicates of Lloyd’s India through their service company would transact reinsurance business with Indian insurers, as well as reinsurance business outside India in accordance with their laid down underwriting policy, Irdai said.