Hope to begin India operations by early 2017: Lloyd's Chief

The world's largest reinsurance player, UK-based Lloyd's, is set to step foot in India and John Nelson Global Chairman tells CNBC-TV18 he is hopeful the Indian insurance regulator will clear their pending application by the year end and pave the way for their formal India foray in early 2017.

Of all the major economies, India has the lowest penetration of insurance with total premiums amounting to only about 0.7 percent of the country’s gross domestic product, Nelson says while pointing at the huge potential for growth here.

With commercialisation and urbanisation growing rapidly over the last few years, many kinds of risks are becoming applicable in India, he says, adding, the fact that the new government supports liberalisation of the insurance industry will help Lloyd’s tap the market better.Below is the transcript of John Nelson's interview with CNBV-TV18's Ronojoy Banerjee.A: There has been a renewed impetus in terms of liberalising the Indian insurance market which is very much supported by the Indian government. Since the new government came into power the insurance act was passed in March 2015, the regulations have now been published. We anticipate getting our authorisations before the end of this year. So, we should be ready to operate in the early part of 2017. We have already opened our office in Mumbai.Q: So, early part of 2017?A: Early part of 2017.Q: You are now looking to enter the India market, how different will the India business model that you will follow be from what you have done in rest of the world?A: There will be many kinds of risks which are becoming very applicable to India. If I look at the Indian market at the moment, India has as we know for last 20-30 years has rapidly commercialised and industrialised. It has also urbanised. So, the top 10 cities are accounting for a greater and greater proportion of GDP and therefore you get concentration of risks.If I then look at the insurance penetration in India, of all the major economies in the world, it is at the lowest, it is at 0.7 percent in terms of premium to GDP. In developed countries, most developed countries you would expect that number to be around 6 percent.Q: Since you talked about headwinds for the specialist insurance industry globally owing to the low interest rate regime, does that automatically make markets like India more attractive?A: Our strategy basically is that as we are the global hub for specialised insurance and reinsurance, the demography of our business should roughly reflect the demography of the world. So, India would be one the great economies of the world. Our business in India, we do some offshore reinsurances very low. So, we see a huge opportunity for the Lloyds market and indeed for the international insurance market to support India.