Insurers move to make Mumbai a reinsurance hub
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Even as the Insurance Amendment Bill is stuck in the Parliament due to lack of political consensus, policy makers and industry players have pitched for a separate reinsurance Bill to make Mumbai a reinsurance hub.
"Till now not one foreign reinsurance company has set up shop in the country… this is a matter of concern," said Yashwant Sinha, Chairman, Parliamentary Standing Committee on Finance and former finance minister. "The Parliament can consider the issue of a reinsurance hub as a separate bill," he said.
Top global reinsurers like Lloyds, Munich Re, Swiss Re and Hannover Re have been keenly awaiting the passage of the Insurance Amendment Bill to enter the Indian market. While existing regulations allow them to set up subsidiaries with 26 per cent stake, they are demanding branch operations in the country.
Prabodh Thakker, managing director, AON Global Insurance Brokers, said a proposal to consider making Mumbai as a reinsurance hub is being submitted to the government and IRDA. Singapore has already emerged as a hub in Asia. Brazil has opened up while New York, London, Japan, Dubai, Bermuda and Shanghai have already become reinsurance hubs. Malaysia is developing its Labuan region as a hub. A hub requires a proper regulatory, tax and framework on the lines of a global financial centre.
Although global reinsurers don't have a proper base here, they have offshore Indian exposure. "The Bill as I understand has been on the ice for a while," said John Nelson, chairman, Lloyd's. Lloyd's intends to have a 100 per cent franchise in India. "And if you look at the experience within the Indian insurance market over the last few years, there are difficulties in doing business," he said.
YP Trivedi, Member of the Parliament Standing Committee on Finance, said Mumbai can become a global hub for reinsurance. "The problem is the taxation part. We have to decide, what type of goods have to be taxed and how much. I request all international players to come forward and open shop here," he said.
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