Our Editor in Chief  Mr. Vivek JAIN, in conversation with Mr. Shankar Garigiparthy, Country Manager & CEO, Lloyd’s India. 

Mr. Shankar is a CEO & Country Manager for Lloyd’s in India, with responsibility for setting up the Lloyd’s office in India For the first time. Prior to moving to Mumbai in April 2016, Mr. Shankar was the Regional Compliance Manager at Lloyd’s Asia and was a responsible for Regulatory compliance for Lloyd’s in Asia. Mr. Shankar holds an MBA from the University of Hull (UK) and a Bachelor of Science degree in Physics from Madras Christian College (India). He is also a Professional Member of the International Compliance Association, having completed the International Diploma in Anti Money Laundering and a Member of the Institute of Risk Management, having completed his Certificate in Risk Management.  

Q1.    Globally Insurance companies are into stress when you think will this end?

COVID-19 has resulted in a humanitarian crisis on a scale the world was under prepared for, and its impact on the global economy is unprecedented. Like many businesses, insurance companies are facing unique challenges in an ever evolving, fast-moving risk landscape. The pandemic is affecting insurers directly through health shocks such as increases in mortality rates and indirectly, via monetary setbacks such as higher credit spread, lower interest rates and decreased equity prices. According to figures Lloyd’s released  in May, the coronavirus pandemic is estimated to cost the global insurance industry approximately $203 billion. The amount paid out by Lloyd’s is forecast to be on par with the September 11, 2001 terror attacks in the US and the combined impact of hurricanes Harvey, Irma and Maria in 2017. 

There will clearly be complex short, medium and long-term challenges for the industry and Lloyd’s immediate focus is on supporting our customers  through the crisis. 

Q2.    How is the stress affecting the reinsurance business?

Multiple lines of business in the insurance sector have been adversely affected by the growing risks of the pandemic. Insurers, reinsurers, rating agencies and regulators are now trying to ascertain and measure risk exposure and allocate risk between the primary insurance sector and reinsurance markets. Primary insurers are predicted  to go over the normal threshold to claim back the costs of extra cover from reinsurance companies. This will add to the challenges the reinsurance sector is already facing, such as persistent low interest rates, challenging pricing conditions in many classes, impact of catastrophes, regulatory reforms and the role of technology.  Paying all valid claims is what the Lloyd’s market is built on, and we will continue to do so despite the pressures we face, and reinsurance is a vital aspect in this.

To overcome the challenges of offering protection for systemic risks at scale, the insurance industry must, over the longer term, work with governments to combine insurance and reinsurance capital. Lloyd’s is currently working on solutions with governments and regulators around the world to combine insurance and reinsurance capital. For example,  Black Swan Re is a reinsurance framework proposed by Lloyd’s as a government and industry partnership that could be put in place to build resilience to this sort of global shock.

Q3.    Do you think India can become a Reinsurance hub? If yes, Why ? If not, then why?

The insurance sector is driving growth for the reinsurance sector which has strengthened its position in India  in recent years. Growth prospects for reinsurance in the India market are positive, which is why many major international reinsurance companies are established in India with promising growth prospects. 

The government has also taken active steps to improve market conditions and back industries requiring essential support. As the use of technology and data analytics grows in India, various risk management strategies applied by reinsurance companies can be improved to assist in economic growth. 

Q4.    What are your future plans for India?

India continues to remain an important market for Lloyd’s and we are focused on underwriting complex risks in the region. We are gradually looking to expand our services and increase our reach. Lloyd’s is looking to introduce specialist (re)insurance products in the India, which will complement the local market and also plug gaps in coverage. Last year Lloyd’s wrote US$303million of Indian reinsurance business and we are continuing to see an increase. 

Globally, Lloyd’s has launched ‘The Future at Lloyd’s’. This strategy puts innovation and digitalisation of the market at its core and it aims to create the most advanced insurance marketplace in the world, providing customers with the support and protection that they will need to grow and prosper. 

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