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Wednesday, February 9, 2011

Lloyd’s to get a warm welcome

The government is planning a red carpet welcome for the world’s biggest insurer Lloyd’s to set shop in India. It is considering amending the Insurance Act to remove the legal hurdles that prevent the India foray of the London-based society of underwriters that handled gross premiums worth over £21.97 billion in 2009.

Currently, for an insurer to do business in India, it has either to be an Indian insurance company itself or a foreign company in joint venture with an Indian firm, subject to the 26% FDI cap in the sector. Lloyd’s could not use this route to enter India as it is not a company but a society of underwriters. Sources said the current provision in the Insurance Act which defines a “foreign company” as one that is not a “domestic company” would be changed to “a company or body established or incorporated under a law of any country outside India.” This would facilitate Lloyd’s entry.

Tata AIG, Max New York, Max Bupa, Bajaj Allianz are the insurance firms in India in which foreign players are involved.Sources added the government was also considering permitting overseas re-insurance companies to open branch offices in India with a minimum net worth of Rs 5,000 crore.

“Heath Insurance” would also be included in the Act and the minimum capital requirement for an exclusive health insurer would be pegged at Rs 50 crore. The proposals were discussed at a meeting between commerce and industry minister Anand Sharma and US commerce secretary Gary Locke on Monday. Locke wants the Indian government to take more steps to open its economy, particularly in dealing with trade barriers.


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