Interview with Mr. Shankar Garigiparthy, Country Manager & CEO (India), LLOYD’S

Q1. Lloyd’s is the world’s specialist insurance and reinsurance market. Can you brief us about Lloyd’s? Lloyd’s of London is a 330-year old reinsurance market, headquartered in the UK and is unrivalled in its underwriting expertise. It has a global network of over 200 registered Lloyd’s brokers and also a global network of over 4,000 local coverholders. Lloyd’s insures people, businesses and communities in more than 200 countries and territories. Lloyd’s market has helped customers around the world withstand shock, recover and rebuild, and we are proud to continue that essential service today. We develop tailor-made policies for every customer in every sector, and cover more than 60 lines of insurance and reinsurance. Q2. What are the plans for Lloyd’s in India? Lloyd’s is licenced in India as a reinsurance branch of Lloyd’s UK. Our syndicates can operate under this licence through a service company that is incorporated in India and obtains its approval from the Insurance Regulatory and Development Authority of India (IRDAI). As of today, we currently have one service company, MS Amlin, operating on the Lloyd’s India platform. We are working with the IRDAI on our second service company application as well. Whilst Lloyd’s remains committed to the Indian market, our syndicates will join the platform, depending on their own underwriting strategy and business plans. Over time, we expect a number of our syndicates to join the India platform, offering reinsurance solutions to our Indian cedants, across various classes of business. As a specialist reinsurance market, we will be looking to offer niche specialist reinsurance solutions, that will not only complement the existing market, but also plug gaps within the market. Q3. How do you view the Indian Reinsurance Market? We are positive on the Indian reinsurance market, it is growing at a steady pace. Several global reinsurance providers are already present in the market through branch presence, and we see this as a positive step to boost healthy competition and ensure robust functioning of the industry. We are confident all the market players are well suited to offer tailored solutions within the industry and build the market’s capabilities for resilience. Q4. You have recently released study on Exploring Crop Re insurance Risk in India. What was the objective behind the study and how do you view the crop insurance market to grow in India? For insurers who are interested in reinsuring crop business schemes in India, this report is extremely useful in providing them an overview of the (re)insurance market, detailed descriptions of the impact of weather (monsoon and extreme events) on crop yields and losses and a description of the benefits of using probabilistic crop models to quantify India’s crop risks. By understanding Indian (re)insurance crop risks better, insurers can improve their portfolio exposure management, set appropriate limits and gain the confidence to expand into this fast-growing market. We believe that the information in the report will be beneficial for all underwriters and exposure managers who are or will be exposed to crop risks in India. Crop insurance is a huge area of opportunity for all parties given the country’s dependence on agriculture and its significance to our GDP. In fact, crop insurance is currently the third-largest non-life market segment in India (behind motor and health) with premiums around USD 3.3 billion.* However, more than 60% of crops in India remain uninsured, and there are a slew of measures, which if undertaken successfully, will certainly be beneficial to the sector. Q5. The Indian general insurance market is highly competitive with huge discounts being offered for procuring business. As a Reinsurer how do you deal with this scenario? We cannot offer comment on the operations of other insurance players in the industry. However, as a reinsurer, it is important that we maintain underwriting discipline and focus on technical underwriting and pricing of the risks. Our underwriters do not focus on the top line, and instead we will work closely with our brokers and cedants in India to develop specialist reinsurance solutions that will meet with the requirements of our cedants. We can only reiterate our commitment to the Indian market and hope our participation can significantly build strong capabilities to meet the growing needs of the reinsurance sector. Q6. Lloyd’s is planning to launch a new digital coverholder matching portal. What are its objectives and any plans to launch it in India? The online portal aims at matching new binder or coverholder, business with Lloyd’s underwriters in a speedy and efficient manner. It will further enhance the market’s ability to quickly, easily and cost effectively attract new business by accessing coverholders in both established and fast growth markets. We are planning to launch a pilot in July this year in the UK, Australia and New Zealand. Based on the success rate of the pilot programme, we are hoping to roll this out globally in 2019. Q7. Which class of business do you believe will have lot of potential to grow in India? India’s economy is booming and disposable incomes are rising rapidly. We hope to see an insurance market where there is wider penetration of both insurance knowledge and products in each and every corner of the country – both in terms of life and non-life insurance. Innovation will play a crucial role in the next level transformation of the industry overall. Q8. Any other developments you would like to share? More than 60% of crops in India remain uninsured. Given the wide range of weather events India is exposed to, no crops are safe from crop damage. With this background, I’d like to go back to the crop report and to highlight some key recommendations by Lloyd’s:

• Increasing discipline in underwriting to reduce bidding by insurers below actuarial rates – especially as competition rises with more companies entering the market.
• Reviewing bidding timelines for insurers to reduce uncertainty over underlying ratings, premium levels and risk exposures.
• Incorporating technology into PMFBY’s claims handling process to increase effectiveness.
• For central government premium subsidies to be paid more quickly to reduce the current payment delays to farmers.
• Increasing access to the (re) insurance market for foreign players and expertise to ensure long-term financial viability.