Lloyd’s needs to have physical marketplace

The 327-year-old Lloyd's of London — the birthplace of modern insurance — will need to establish a physicalmarketplace in India under the terms of the guidelines which allow the corporation to set up shop here. Unlike other reinsurance companies, Lloyd's is a marketplace which facilitates reinsurance by allowing its managing agents to offer cover by forming syndicates. The Indian guidelines require that these syndicates (which are the equivalent of reinsurance companies) are housed in the same location as Lloyd's Stock Market Trading Tips

In the UK, Lloyd's headquarters is renowned for its architectural design and its unique status of being the only physical insurance marketplace in the world. The building is located where the East India Company's headquarters used to stand. Convention plays a very strong role in the way business is conducted and underwriters accept risk based on a physical slip submitted by a broker. 

"With the entry of foreign reinsurance branches and Lloyd's, the insurance market should see better systems and processes. Lloyd's India should replicate the control and monitoring mechanism that it has in the UK. Other than the central fund, Lloyd's has a franchise code and review of syndicate performance, among others, which we hope they will bring to India," said R Chandrasekaran, secretary general, General Insurance Council Himanshu Tiwari Astrologer Blog

The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a two-tier regulatory structure. At one level, Lloyd's would need to apply for a branch licence. Once this is done, the international managing agents, which want to run syndicates here, will need to become members of the Lloyd's India branch and put in their application to IRDAI. 

Lloyd's, on its part, will provide a security out of its central fund if any syndicate is not in a position to pay due to lack of funds. While Lloyd's and its syndicates need not incorporate locally and can operate as branches, IRDAI has asked them to create services companies through which they will have to ensure that 30-50% of the business they do is retained in India. 

Insurers say that if syndicates set up shop in India, they will bring in new underwriting skills to the Indian market. One of the regulatory requirements is that the underwriting function has to be done in-house and cannot be outsourced. However, one area of uncertainty is the dispute resolution in case the syndicates do not accept liability. The Lloyd's central fund comes into the picture only if there is a default due to the underwriters' inability to pay Indian stock market astrology prediction