Lloyd’s of London will finally be able to do re-insurance business in India. The Government is expected to clear the passage for the largest re-insurance entity by amending the Insurance Act, 1938.

The Cabinet is soon expected to take up a proposal to facilitate Lloyd’s entry. With the finance ministry clearing the amendments, the re-insurer’s arrival in India is seen as a threat to the state-owned General Insurance Corporation’s monopoly.

Changes in the Insurance Act, 1938, have become necessary as Lloyd’s is a society and not a company — the only one at a global scale that underwrites, especially re-insurance risks.

The current Insurance Act only permits companies to sell products in India. The changes in the Act will allow this society of underwriters to enter the re-insurance business on its own or form a JV with any Indian partner. But, the one-off change will benefit only Lloyd’s and not any other society. Meanwhile, global re-insurance companies like Munich Re and Swiss Re are also keen to set up branches in India.

The re-insurance business in the country is estimated to be of Rs 4,800 crore. According to the Government sources, the proposal to open up the market, that was on the backburner for quite some time, is back on the table. It is expected to be cleared soon. “The amendments were proposed almost a year ago, during the omnibus review of the Insurance Act. Since the amendments also contained a proposal to hike foreign direct investment in the sector, it could not garner the support of the Left parties in Parliament. But the stand-alone amendment is likely to be passed,” said a government official.

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