Ladies and gentlemen, I wish you all a very warm welcome to the Taj hotel and my thanks for being here today. I am delighted to be able to lead a delegation of 25 Lloyd’s managing agents and Lloyd’s brokers. Welcome to Lloyd’s first seminar in India.
It is often said that Lloyd’s is one of the best known and least understood businesses. The aim of this afternoon’s seminar is to tell you – how we think, how we work and how we can help you help Indian businesses handle risk as your accelerating economy develops.
That we have Lloyd’s representatives from London and Singapore here today is a reflection of our commitment to the Indian market. Over our three day programme in Mumbai we will meet many of you and discover more about your companies listen to what you tell us about the Indian insurance market and discuss ways in which we can work together to develop new business opportunities and support each other better.
I’d like to spend a few minutes telling you about what Lloyd’s is offering. Then I’ll hand over to Ed Pennock, from our International Markets Team and Grant Elliot, CEO of Aon Insurance Brokers here in India.
After that, David Indge, who leads our Class of Business Team, will outline the outlook for the international insurance industry, the development of new and innovative products and how Lloyd’s plans to support the future needs of the Indian market.
We’ll close with a panel answering your questions – of which I hope there will be many – and I’m pleased that Chris London from Beazley is able to join the panel and bring his wide knowledge of the Indian market to the debate. We will then open our ‘Meet the Market’ event where each of the delegates will have a stand and we can get to know each other better over cocktails and canapés.
But first, why Lloyd’s and India? What’s the fit? Let me put this in context:
India is a country which has always defied easy definitions. The diversity of people, the beauty of so many Indian cities and the richness of your history makes India a country hard to sum up in a single sentence.
Because of this, India can be hard to understand for organisations that arrive without any previous history. Well, Lloyd’s history in India goes back 200 years.
In theory, the East India Trading Company had an official trading monopoly with India but - in reality - it couldn’t trade all the goods it needed. And that’s where Lloyd’s came in – insuring this unofficial ‘country’ trade between India and Britain. The importance of this local knowledge is reflected again today in the invaluable support of our local consultant, Arun Agarwal.
And this trade was a risky business – return voyages between London and India could take up to two years – two years of fending off illness, monsoons and pirates.
Then as now, time was money – it also meant the difference between getting accurate information to and from India or being hopelessly out of date.
So in 1812 the first Lloyd’s Agency in India was established. The first Lloyd’s agents in India were set up here, in Mumbai, and in Madras and Calcutta. They forged relationships with Indian businesses and port officials – local knowledge which helped British merchants with their business dealings in ports and provided accurate information between these merchants and their companies back home. The current Lloyd’s agent is also here with us to today.
I believe it’s fitting that, on the bi-centenary of Lloyd’s involvement in India, the Lloyd’s market is back in Mumbai to forge new relationships with the businesses of today.
Of course, we have been doing business with India for many years. In 2011 Lloyd’s wrote approximately $180m of re-insurance business with Indian companies and we want to work with you to take this further. This is about the same as Lloyd’s writes from China, more than from Russia and quite a bit less than Brazil.
As you will be aware Lloyd’s is also exploring licence opportunities in India and will continue to work with the Regulator and local market to find a solution that fits for all.
Our goal in India has always been to support the specialist needs of the local market to provide the protection this growing economy needs as it expands.
Ladies and gentlemen, India is sitting on the cusp of an explosion of investment.
As you all know, so far the development of India’s infrastructure has not kept pace with her growth. Government and state-organised projects have not always delivered. A more successful model has been the ‘Public/Private Partnership’ projects which has help build a number of airport terminals across India.
Investment in this model has grown significantly over the last five years. While it currently stands at almost 8% of India’s GDP the Government’s next five year plan aims to increase this to 10% - that’s $1trillion at the service of industry and infrastructure.
And, just a few weeks ago, the government announced the launch of $35bn of a new public sector initiative – investing in infrastructure to provide even more economic stimulus.
The opportunities for investment in infrastructure are enormous. In power, in the widening of the National Highways, in port development, in airports and in railways.
The development of the Delhi Mumbai Industrial Corridor is a dramatic case in point – a US$90bn project that will deliver a high speed freight corridor of nearly 1,500 km, with three ports and six airports and nine huge industrial zones. All financed by Indian and Japanese investment.
And the opportunities for investment in growing and internationalising businesses across many other sectors as well included areas such as IT and Motor may be even greater. Right here in Mumbai, you house the international headquarters of Tata Motors, a company which has exported its factories and plants to Thailand, South Africa, Argentina, Britain and, most recently, Brazil.
There are hundreds, if not thousands, of the Tata’s of tomorrow in India. We want to work with you to give them the protection and the confidence they need to grow. Lloyd’s has decades of experience in developing the innovative products which expanding infrastructure, industry and businesses need – we are the experts in risk.
And we know that the approach to risk here in India is very different to that of Europe and the US.
We know this because we don’t just answer the important questions – we also ask them. At the end of last year we published the Lloyd’s Risk Index – a barometer of global business leaders approach to risk.
The results from growing economies in this region showed a significantly greater awareness of the negative impact of a range of risks – from natural catastrophes to rapid technological change – than in the more complacent Europe and US.
Business and investors in India take risk seriously. They want the appropriate protection and they need to be confident that they can rely on it – in good economic times and bad.
That’s where Lloyd’s can offer unrivalled security. Throughout our 324-year history we have never failed to pay out on a valid claim – which is, after all, the most important point for our policyholders.
Last year – as we know, an exceptionally bad year for natural catastrophes – we paid out over $1.4bn for the earthquakes in Christchurch and nearly $2bn for the Japanese earthquake and tsunami. In 2011 we helped literally millions of people and thousands of businesses pick up the pieces and start again after such events.
Lloyd’s entire financial risk management framework is built around our ‘chain of security’ – a unique system which ensures we are always robustly capitalised.
And, because we are a partly mutualised market, that capital security covers every single company in the Lloyd’s market. Lloyd’s may be the home of insurance innovation but it is also an extremely safe place to do business – as is recognised by the ratings agencies who reaffirm our A and A+ ratings year after year.
With this security behind us we are confidently moving forwards, using the experience of our long history as we evolve to meet the future.
Our developing vision for Lloyd’s is to build stronger and deeper relationships with growing economies and emerging markets, bringing new capital and new people into the Lloyd’s market to ensure we build further on the diversity that is our strength.
200 years since Lloyd’s India began here in Mumbai, I hope today we can begin to create the relationships we will all need to meet the new demands of the new India.
And now I would like to hand you over our speakers and then at the end provide you with the opportunities to ask questions at our panel session. Thank you.
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